Columbia Threadneedle: ECB likely to cut rates in September

Columbia Threadneedle: ECB likely to cut rates in September

July 19, 2024

ECB
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Please see below a comment from Dave Chappell, Senior Fund Manager, Fixed Income at Columbia Threadneedle Investments after yesterday’s ECB meeting:

'Today’s ECB meeting passed with little surprise and therefore limited moves in financial markets. As we expected, both the monetary policy statement and President Lagarde’s comments, made clear that there is not a course for rate normalisation at present; after the pervious discomfort caused by near “explicit” forward guidance. Future moves in rates will be data-dependent and determined on a meeting-by-meeting basis.

Recent service inflation and wage data have failed to moderate, as initially hoped after June’s rate cut. While the risks to growth remain to the downside, workers compensation is still playing catch up in some sectors as result of the post covid surge in inflation. The ECB remains confident that wages will soften over the coming quarters, back to levels that will allow inflation to move back to the 2% target on a sustainable basis. As this occurs, the central bank will take further normalisation steps, with the next one likely occurring in September.'

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