ECB’s Simkus: The risks that inflation will be below the goal in the future have increased

• I see scope for an interest rate reduction in June.
• Balance of risks for inflation is to the downside due to trade friction with the US and stronger euro.
• Borrowing costs are currently at the upper end of the neutral range.
• The risks that inflation will be below the goal in the future have increased.

Today, the French inflation data missed expectations by a big margin which weighed on the euro. We might see the divergence between the Fed and the ECB getting stronger in the next months.

This article was written by Giuseppe Dellamotta at www.forexlive.com.