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Limited room for ECB interest rate cuts – Commerzbank

Dr. Marco Wagner, Senior Economist at Commerzbanknotes that There is practically no doubt that the European Central Bank (ECB) will lower official interest rates in June, but it maintains that the ECB will hardly be able to lower the deposit rate below 3%.

The ECB's room for maneuver for further interest rate cuts will be limited

“In the short term, the ECB's outlook is likely to be quite accurate, that is, inflation will continue to decline in the remainder of 2024, albeit with fluctuations. However, there is enormous underlying structural inflationary pressure that will drive inflation in the next years.”

“Therefore, central bankers will only have one window of opportunity to cut interest rates in the coming months, which we believe will close in the spring of next year. The ECB's room for maneuver for further rate cuts “Interest will be limited as high inflationary pressure then becomes increasingly visible.”

Source: Fx Street

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