ECB hawks open to September rate cut if data supports it, sources say

FRANKFURT (Reuters) – Even some of the European Central Bank’s more hawkish policymakers are open to an interest rate cut in September, provided incoming data confirm that disinflation is continuing, four sources with direct knowledge of the discussion said.

The ECB held rates steady on Thursday and its President, Christine Lagarde, said its next decision on Sept. 12 was “wide open” and she declined to repeat the comment she made in June that there was a “strong likelihood” that the dialling back of monetary policy was underway.

But conversations with four ECB sources showed that even some of the more conservative policymakers, or hawks in market parlance, were not opposed to a new rate reduction after the summer break.

The sources asked not to be named because the discussions were private.

An ECB spokesman declined to comment.

Any cut, however, depended on data due in late August and early September confirming that wage growth is cooling, corporate profits are moderating and productivity is rebounding.

All of these have long been anticipated by the ECB’s economic projections.

The sources said the ECB must avoid explicit guidance for now after it got burned in June when it signalled a cut long before the meeting, only to face negative data surprises in the final stretch before the meeting.