Ben Nichols, Managing Director at RAW Capital Partners | The European Central Bank (ECB) has been signalling for several weeks that another rate cut was imminent, so this morning’s announcement is unlikely to trigger a significant market reaction. With Eurozone inflation falling to 1.8% in September, policymakers appear optimistic about the trajectory of the European economy, though inflation may rise again in Q4 due to base effects from last year’s…
j.P. Marín-Arrese | Headline inflation is markedly dropping in Europe, even if the core one trails behind. Plummeting energy costs have played a key role in reining in prices. Yet, the ongoing Middle East crisis could derail this process. Later this year, the unfolding of tax rebates to relieve consumers badly hit by the inflationary bout will feed fresh pressures. Thus, unless the ECB resolutely cuts rates in the October…
Bankinter: ECB minutes of the meeting of 12 September. The focus in the markets has shifted towards economic growth to the detriment of inflation, which has moderated in recent months. Fears of a slowdown in the US economy have raised expectations that the Fed will cut rates more aggressively than the ECB. This approach has carried over to Europe in the face of a somewhat weaker macro picture than in…
Ben Nichols, Managing Director of RAW Capital Partners | Today’s decision aligned with market expectations, and recent macroeconomic data – such as Q2 GDP growth of 0.3% in the Eurozone – supports the ECB’s ongoing monetary easing strategy. Although inflation hasn’t yet hit the central bank’s 2% target, the Eurozone appears to be on a stable path to recovery, with GDP projected to grow by 1% in 2024. With the…
Link Securities | Slovak central bank governor and European Central Bank (ECB) Governing Council member Peter Kazimir said yesterday in an opinion piece reported by Bloomberg that market bets on two more rate cuts this year are not ‘completely misplaced’. However, he pointed out that they should not be taken as ‘a given or a reference scenario’. In that sense, Kazimir said that they (ECB) are on the way back…
Peter Goves (MFS Investment Management) | As widely expected, the ECB kept all three of its policy rates on hold at the neutral July meeting. The deposit rate therefore remains at 3.75% following the cut at the June meeting. The central bank still considers prevailing rates are contributing to lowering inflation and that monetary policy is keeping financing conditions restrictive. Future decisions will still ensure that the policy rates remain “sufficiently…
ING | The ECB is weighing sticky inflation and wages with a softening growth outlook, French political turmoil, and more dovish Fed expectations. Cutting again this week is out of the question, and giving new rate guidance is probably an undesirable path too. Once again, less is more in ECB communication, and the impact on rates and FX should be limited As discussed in our full European Central Bank preview,…
Banca March: Christine Lagarde opens the ECB’s annual forum in Sintra, warning that “the soft landing of the economy is not yet guaranteed”. The head of the monetary authority has asked for more time to make sure that the risks that could push inflation above the 2% target have passed, indicating that the strength of the labour market gives them some room to gather more information, stressing the message of…
BancaMarch: ECB Executive Board member Isabel Schnabel has said that the threat of potential price shocks makes it impossible to commit to a fixed path for the level of interest rates. The monetary authority expects a process with ups and downs in price changes, although Schnabel said that recent progress points in the right direction. She added that now that inflation is easing, wage growth is gradually declining and there…
Martin Wolburg (Generali AM) | Markets remain concerned in the home stretch of the fight against inflation that central banks should only reluctantly ease rates. Recently, ECB Governing Council members such as Schnabel and de Guindos warned about wage growth developments as an upside risk to inflation. Last week, German official wage data for the first quarter (+6.2% year-on-year) pointed in that direction and, at the eurozone level, negotiated first…