by Balazs Koranyi

JACKSON HOLE, Wyoming (Reuters) – A growing number of European Central Bank officials are backing another interest rate cut in September barring a major surprise, seven sources familiar with the discussions said.

Financial markets are already largely expecting a further rate cut next month, but monetary officials are not showing the same certainty.

However, a recent series of data on growth, wages and prices, considered satisfactory, would have changed the situation.

According to these sources familiar with the discussions and open to a new rate cut on September 12, the planets are aligning: price pressures are easing as expected, economic growth is not living up to expectations, wage growth is weakening and the signals from the US Federal Reserve (Fed) regarding its own easing are making the ECB’s task easier.

“We are largely where we want to be,” said Martins Kazaks, president of the Bank of Latvia, when asked about a possible rate cut in September.

“Our June projections were for two more rate cuts this year and I currently see no reason not to follow through,” he added, days after Finland’s Olli Rehn argued in favour of a cut next month.

There is broad support for a September cut, although most policymakers are waiting for more data before finalizing their views, according to sources who spoke to Reuters on condition of anonymity, based on private and informal conversations.

ECB President Christine Lagarde, whose support for the move will be crucial, has so far sent no signals and has not made any public comments on the bloc’s monetary policy for weeks.

An ECB spokesman declined to comment. The sources said formal discussions had not yet started and that important data were still to be released before September 12.

Markets currently see a rate cut in September as 90% likely and are pricing in at least one more this year, followed by steady cuts in 2025.

(Reporting by Balazs Koranyi; by Kate Entringer, edited by Jean-Stéphane Brosse)

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