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LONDON - The European Central Bank can gradually reduce interest rates given the decline in inflation, and decisions on future cuts could centre around quarterly meetings with new economic projections, Dutch central bank chief Klaas Knot said on Tuesday.
"Policy rates will slowly but gradually move to less restrictive levels," he said in a speech in London."Projection round meetings of the Governing Council will be the key meetings for our interest rate decisions." Knot argued that March projections suggested that three to four rate cuts could have been appropriate this year, but wage growth remains elevated and productivity growth is weak, so it was not evident that the June 6 projections would point to a similar rate path.
Markets currently anticipate around 60 basis points of rate cuts this year or between two and three moves, including a fully priced in June step.
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