abrdn: ECB rate cut practically certain

abrdn: ECB rate cut practically certain

May 29, 2024

ECB
europese centrale bank (ECB).png

Felix Feather, Economist at abrdn, comments on next week's ECB meeting:

'An ECB rate cut next week is almost guaranteed. We think services inflation and wage growth data remain too hot for back-to-back cuts in June and July, so this could be a hawkish cut. This Friday’s flash inflation reading now becomes key. An uptick in the headline rate is widely expected but it would have to be extremely large to knock the ECB off course for a June cut. However, what happens to core service inflation will be key to setting expectations for the ECB path beyond June. The recent strength in labour cost growth could mean that services inflation strengthens, leaving the ECB on hold for a period after the initial cut.'

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