European Central Bank (ECB) Governing Council member Christodoulos Patsalides said on Tuesday that an interest rate cut in June is not the "default" decision, especially in light of the ongoing trade and geopolitical tensions. He added that an "aggressive" cut is not warranted as the Eurozone seems likely to avoid recession this year. "There has been a shift in capital flows away from the United States, with increased reinvestment activity directed to the euro area, which helps to support domestic financial conditions," he told Econostream Media.
Patsalides noted that several disinflationary factors are influencing the Eurozone, including the appreciation of the euro, falling energy prices, and a "potential trade diversion from China." However, he expected them to be temporary and predicted that, even if inflation falls under the 2% target, it will do so only briefly.
