“I think so (interest rates will be cut by 25 basis points in June – ELTA). The reason is that there is no sudden need to react on a larger scale. The conditions are in place for inflation to return to the 2% target level as soon as next year under a less restrictive monetary policy,” Gediminas Šimkus told reporters on Monday.
It is highly probable that the key interest rates will be reduced more than three times this year, he said.
“As I see the economic development with a probability of more than 50%, I believe that there will be more [cuts than three – ELTA],” Šimkus said.
The governor of the Bank of Lithuania also said that the Iran-Israel conflict should not have an impact on interest rate cuts.
“I looked at oil prices, and they went up and down again. Yet these two countries are not the ones that are causing economic tectonic faults,” Šimkus said.
There is a “non-zero probability” that interest rates would be reduced in July as well, according to the central bank’s board chairman.
On Thursday, the European Central Bank held interest rates steady, as expected, but said slowing inflation could open the door to easing monetary policy, AFP reported.
The bank maintained its key refinancing rate, which provides liquidity to the banking system, at 4.5%.
