DWS: Next ECB rate cuts probably in September and December

DWS: Next ECB rate cuts probably in September and December

June 7, 2024

Interest Rates ECB
europese centrale bank (ECB).png

Ulrike Kastens, Economist Europe at DWS, comments on yesterday’s ECB meeting.

ECB interest rate cut ahead of the Fed - Pause in July, further cut rates in September and December

  • Central banks worldwide are ready to moderate the degree of monetary restriction. Following the central banks of Switzerland, Sweden, and Canada, the ECB also cut its interest rates today. Differences in economic and inflation cycles allowed them to lower the key interest rates before the Fed.
  • As we had expected, the ECB did not pre-commit to a specific path for further interest rate cuts. Data dependency remains key. At the same time, the upward revision of inflation forecasts for 2025 suggests that it may now take longer to reach the inflation target. This forecast was much more hawkish than expected and implies only very gradual interest rate cuts ahead.
  • We expect a pause in July before the ECB will probably cut rates again in September and December.

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