ECB's Philip Lane warns against raising hopes over future interest rate cuts 

His comments come as the cost of borrowing among eurozone governments falls after the US Federal Reserve softened its stance on interest rate cuts

Chief economist for the European Central Bank Philip Lane was speaking ahead a meeting of the bank next month where a rate cut is widely expected. 

Chief economist at the European Central Bank (ECB) Philip Lane has said it should "avoid" pre-commitments or fueling "unwarranted expectations" surrounding potential rate cuts as there is still great uncertainty in the economic outlook.

The ECB is set to meet next month where it is widely expected to make its first interest rate cut in nearly two years. However, policymakers have been increasingly careful to avoid any commitment beyond this first move. 

Mr Lane said the ECB should avoid adding to interest rate cut expectations given the bank’s economic forecasts are only published every three months. 

"A robust approach to making rate decisions under conditions of high uncertainty is to avoid pre-commitments or creating unwarranted expectations about the future rate path," Mr Lane said.

"In particular, moving from one meeting to the next meeting and from one projection round to the next projection round allows for the accumulation of further data that can help inform the rate decision."

The ECB has more meetings scheduled for July and September but comments made by Mr Lane suggest that more interest rate cuts at these meetings are not guaranteed as they wait for additional data.

Mr Lane’s comments come as the cost of borrowing among eurozone governments falls after the US Federal Reserve softened its stance on interest rate cuts. In addition, new US labour market data showed much weaker job growth than expected in April.

Investors expect the ECB will be able to cut rates more than the Fed this year due to weaker growth and cooler inflation.

Germany's 10-year bond yield, the benchmark for the eurozone, dropped to 2.46%, from 2.54%. A similar drop was seen in the Italian 10-year bond.

Yields were on track to end the week sharply lower after the Federal Reserve held interest rates on Wednesday and Chair Jerome Powell said another hike was unlikely. He suggested rate cuts remain on the table, albeit likely later than expected after a run of strong economic data.

Additional reporting Reuters