Nick Kounis, Director of Financial Markets and Sustainability Research at ABN Amro, notes that the President of the European Central Bank (ECB) stated that, although the Governing Council “depends on the data”, “it does not depend on the Fed”
The ECB will cut official interest rates at each and every one of its meetings starting in June
“Overall, we believe that the ECB's communication is consistent with the start of a rate cut cycle at the June Governing Council meeting. The vast majority of officials seemed willing to support a rate cut in June and the “few” who did not think that the data already justified a decision at this meeting. Looking ahead, the ECB would not commit in advance “to a specific rate path”, but would “follow a data-dependent approach” and meeting by meeting.”
“Our baseline assumption is that the ECB will cut official interest rates at each and every meeting starting in June. In our view, interest rates are currently in restrictive territory. Estimates of the neutral rate are the half or less of the current level of the deposit rate. With the eurozone economy having been stagnant for more than a year, the only justification for tight monetary policy has been above-target inflation. However, the inflation outlook “is changing rapidly. Even assuming 125 bps of rate cuts this year, monetary policy would still be restrictive at the end of 2024.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
