FRANKFURT (Reuters) – The case for a European Central Bank (ECB) rate cut in June is strengthening amid falling services inflation, Philip Lane, the ECB’s chief economist, said on Monday. the Frankfurt institution, in an interview given to the Spanish newspaper El Confidencial.

The ECB has hinted it could ease monetary policy after its June 6 meeting if new data supports rate-setters’ beliefs that inflation will move closer to the 2% target. by mid-2025.

“Both the preliminary estimate of euro area inflation for April and the first quarter GDP figure reinforce my confidence that inflation should return to its target within the given time frame,” Philip Lane said.

“So, as of today, my personal confidence level has improved from our April meeting,” he added, noting that more key data is still to be released in the coming weeks.

Investors also seem to think that a rate cut in June is almost a given, even if doubts have built up in recent weeks about measures beyond this deadline, with the US Federal Reserve (Fed) having suggested that its easing monetary could be delayed.

Even though the ECB insists it does not depend on the Fed, a growing gap between interest rates among the world’s biggest central banks would weaken the euro and boost European inflation, dampening the impact of a solitary decision by the ECB.

Philip Lane stressed that April inflation data finally showed improvement on easing price growth in services, but that the bank would continue to monitor the sector to ensure it does not subsequently derail the disinflation process.

Headline inflation stood at 2.4% year-on-year in April and the ECB expects it to fluctuate around this level for most of the year, before falling below this threshold again in 2025.

(Reporting Balazs Koranyi; Claude Chendjou, editing by Kate Entringer)

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