Recent interest rate cuts by a number of European central banks indicate the continent’s increasing readiness to take a different path from the US on monetary policy, economists told the Financial Times (FT).
Sweden's Riksbank cut its main interest rate earlier this month — for the first time since 2016 — by 0.25 percentage points to 3.75%. “We are convinced enough that inflation has come down, and has come down in a sustainable way,” Riksbank Governor Erik Thedeen said.
In March, the Swiss National Bank cut its main interest rate by 25 basis points to 1.5% in a surprise move which made it the first European central bank to scrap tighter monetary policy in the face of inflation.
Also in March, the Czech Republic’s central bank cut its key interest rate for a third time in a row amid plummeting inflation in an effort to boost the economy. The reduction brought the interest rate down to 5.75%.
Later in March, the National Bank of Hungary (NBH) slashed its base rate by 75 basis points to 8.25%, with Deputy Governor Barnabas Virag telling reporters that the bank should pursue "an increasingly cautious monetary policy in the second half of the year."
Meanwhile, the European Central Bank has signaled it could start cutting rates for the 20-country eurozone at its next meeting in early June, if incoming data confirm a fall in inflation.