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From the Kalends to the Ides of June: when will interest rates fall?

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Plutarch (46-120), the one of the “Parallel Lives”, tells that on the Lupercales – February 15 -, fecundity festivals in Rome, a fortune teller blurted out to Julius Caesar (100BC-44BC): “Beware of the Ides of March!, that is, the 15th of that month, the day he was murdered by a conspiratorial group of senators. The Months in the Roman calendar begin with the “kalends”, where the word calendar comes from, and the “ides” range between the 13th and the 15th.. In June, for example, the “ides” are on the 13th.

Next June 6, right between the “kalends” and the “ides”, the European Central Bank chaired by Christine Lagarde” will begin lower interest rates, according to the latest message released by Pablo Hernández de Cos, governor of the Bank of Spain and member of the board of the ECB. “The normal thing,” he said on Sunday in an interview in “El Periódico”—is for the ECB to begin reducing rates in June.” Yesterday, Luis de Guindos, vice president of the ECB, was less explicit, but also referred to the same moment: “We will have more information in June”. Neither one nor the other spoke for the sake of speaking. Hernández de Cos’ words must be understood, in the jargon of central bankers, as the ECB’s intention is to lower interest rates at its monetary policy meeting on Thursday, June 6. There may be surprises, of course, but the governor speaks through the ECB and points out its intentions. In February, inflation in the eurozone remained at 2.6% –2.9% in Spain–, closer to the 2% objective of the institution chaired by Lagarde . If the downward trend continues, which is the additional information that Guindos talks about, interest rates will drop in June. Of course, it will be in a testimonial, indicative way, and for there to be new reductions throughout the year there should be no inflationary spikes, something that now seems possible, but not certain. Geopolitical uncertainties – Ukraine, Gaza and the elections in the US – on the one hand, and weak economic growth – stagnation in Germany – are opposing factors that will influence the future of monetary policy. In June, by the way, there will also be new governor of the Bank of Spainperhaps because of the “ides” spoken of by the soothsayer mentioned by Plutarch.

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