(Bloomberg) -- There’s one thing European Central Bank officials seem to agree on — that a first cut in interest rates will probably be delivered in June.

How many will follow and how quickly is still very much contested. 

The differences in opinion aired in the past week highlight the challenges of finding common ground as policymakers close in on their 2% inflation goal, wary of the risks of another oil-price shock or delays in monetary easing by the Federal Reserve.

Only four of the Governing Council’s 26 members stayed out of the debate that’s mostly unfolded around the International Monetary Fund’s spring meetings in Washington. President Christine Lagarde has stuck to the official line that borrowing costs will be lowered in “reasonably short order” and economic data will steer what happens next. 

Agreeing — More or Less — on June

While officials all point to June as the moment when the ECB will start dialing back the unprecedented rate hikes that have weighed on the economy as well as curbing inflation, their level of conviction differs.

Least enthusiastic is Austrian uber-hawk Robert Holzmann, who says he’s “not fully” convinced, though is leaning in that direction. Germany’s Joachim Nagel and Slovenia’s Bostjan Vasle spoke about the rising “likelihood” of such a step. Slovakia’s Peter Kazimir sees a door opening, and Italy’s Fabio Panetta raised the possibility that “June could bring some news.”

Their Finnish colleague Olli Rehn seemed more convinced, arguing that “the time will be ripe” if inflation develops in line with expectations, while France’s Francois Villeroy de Galhau said June’s reduction in borrowing costs should go ahead, “barring a major surprise.”

Disagreement on Rate Path Beyond

With June resembling a done deal, much of the discussion focuses on the rate path beyond. One group of officials that includes Latvia’s Martins Kazaks says it’s too early to declare victory over inflation, and sees no need to hastily bring borrowing costs down to levels where they stop restraining demand.

Another, around Chief Economist Philip Lane, argues that the ECB decided to be data-dependent for a reason and will set policy on a meeting-by-meeting basis without pre-committing to a particular, predefined course. Madis Muller of Estonia says the ECB mustn’t rush into further interest rate cuts after a likely first step in June.

There are also those who are already busy plotting the downward trajectory of the deposit rate, which currently stands at 4%.

Villeroy is convinced the ECB shouldn’t “concentrate” cuts at quarterly meetings when new forecasts are published. Lithuania’s Gediminas Simkus is toying with the idea of about three reductions this year, while Greece’s Yannis Stournaras said last week that he wants to see four. Malta’s Edward Scicluna even raised the idea of moving in bigger, half-point steps, without delay, should inflation projections fall below 2%.

Pierre Wunsch of Belgium suggested a middle ground. “Without negative surprises, the first two rate cuts are quite easy and then it becomes a bit more complicated,” he said.

Responding to the Fed

Officials appear at odds over how the prospect of lengthier delays in Fed rate reductions would affect policy at home. With inflation proving more resilient than expected in the US, there’s a distinct possibility that policymakers there will only deliver one or two cuts — if any at all. 

Holzmann isn’t convinced the ECB could pull “too far away” should the Fed not lower rates this year and would be hesitant of cutting three or four times. Policymakers in Frankfurt can’t fully disregard developments in the US when charting their own path, Vasle said.

Nagel and Dutch colleague Klaas Knot noted that the ECB sets monetary policy in a global context — but ultimately decides based on its own outlook. Portugal’s Mario Centeno, meanwhile, said the ECB isn’t “looking at the US.” 

Risks of Another Oil-Price Shock

The situation in the Middle East may be looking increasingly precarious, though officials are split on what a potential oil-price jump may mean.

Executive Board member Piero Cipollone described such a scenario as “one of the major concerns.”

Knot was more sanguine, saying that “if we have an oil shock, it will be against a backdrop of general disinflation in all other factors.”

“The likelihood of significant second-round effects, I would argue, is smaller but it is clearly something to monitor,” he told Bloomberg Television.

Exchange-Rate Fluctuations

While the ECB doesn’t target a particular exchange rate, Knot said it’s “one input” that shapes officials’ thinking.

A prolonged period of monetary easing in Europe with the US not acting to the same extent could dent the euro, with Lagarde saying officials will watch fluctuations “very carefully,” despite not shooting for a specific level.

“While we have a single mandate with a primary objective of price stability, obviously we have to take into account the impact that exchange-rate variations will have on our inflation,” she said. “That movement of currencies may have an impact on inflation by way of imported inflation.”

(Updates with comment from Estonian central banker in ninth paragraph. A previous version of this story corrected the ECB deposit rate in the 10th paragraph)

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