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29/05/24
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Analysts Expect Next Week’s ECB Rate Cut to Be Hawkish
According to analysts at ING, although the European Central Bank may have created the expectation that it would cut interest rates at its meeting next week, it is not clear what officials would do later in the year.
Encouraged by data that showed that inflation in the eurozone was slowing to the ECB’s target of 2%, policymakers have been signaling that they would cut its deposit rate by 0.25% at the meeting in June.
The interest rate is currently at an all-time high of 4% after extensive policy tightening meant to curb price gains.
Chief Economist Philip Lane earlier this week appeared to support a rate cut and said in an interview that the economic data provided enough evidence to justify removing the restriction’s top level.
Although Francois Villeroy de Galhau, the French central bank’s chief told the Boersen Zeitung in Germany that the ECB had room to cut rates, he said it had some freedom regarding subsequent cuts.
The ECB will be able to evaluate new inflation data from the eurozone on Friday, and economists predict that prices increased at a slightly faster annual pace in May compared to the previous month.
ECB President Christine Lagarde said last week that she was confident that inflationary pressures were under control.
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