Pimco: Next Stop, September

Jul 19, 2024

Konstantin Veit, Portfolio Manager at Pimco, comments on yesterday's ECB meeting.

• ECB monetary policy meetings in July tend to be uneventful and, as we expected, today’s meeting proved no exception. The ECB kept policy rates unchanged, at 3.75% on the deposit facility, and did not provide much guidance.
• A strong labour market suggests that the ECB is in no rush to cut rates further.
• The data flow over the coming months will decide the speed at which the ECB removes additional restrictiveness.
• Given the ECB’s reaction function, we envision the ECB to keep lowering policy rates at staff projection meetings, and expect the next deposit facility rate cut in September.
• Contrary to earlier this year, current market pricing seems reasonable and broadly in line with our long-held baseline of three cuts for this year.