Reacties asset managers op ECB's rentebesluit

13 september 2024

Hieronder treft u de reacties van verschillende asset managers op het besluit van de ECB om de rente te verlagen van 3,75 procent naar 3,5 procent.

Van Lanschot Kempen: One more rate cut in December

By Joost van Leenders, Senior Investment Strategist, Van Lanschot Kempen

Today’s rate cut by the ECB was no surprise. In recent comments, ECB policymakers had not tried to steer markets to any other option than the 25 basis point rate cute delivered today. End even though the ECB had paused in July, ECB-president Lagarde had acknowledged in June that the ECB is currently in the dialling back phase of monetary policy.

The ECB only slightly adjusted its growth and inflation forecasts. At 0.8% this year and 1.3% in 2025, the ECB growth projection was a notch lower than in June, as domestic demand underwhelmed. Headline inflation projections were unchanged at 2.5% this year and 2.2% next year. Core inflation is now projected slightly higher at 2.9% this year and 2.3% next year. Importantly for the ECB’s thinking about inflation and monetary policy, inflation is expected to return to the 2% target by the end of next year.

In her press conference, Lagarde presented this rate cut as another step in moderating the degree of monetary policy restrictiveness. Monetary policy will be held restrictive though, as long as necessary to get inflation back to the 2% target in a sustainable manner. The ECB will stay data-dependent and will decide about its policies meeting by meeting, as domestic price pressures are resilient, persistent and not satisfactory. However, with wage growth moderating according to different measures and profits absorbing some price pressures, according to Lagarde, the direction of rates is obviously declining. We expect one more rate cut this year in December.

All in all, there were no major surprises today. The German two-year and ten-year yield had risen a bit before the decision but fell back during and after. The positive mood on equity markets in the morning, following strong gains in the US the day before, soured a bit though. The modest growth outlook and the revelation that the ECB sees profit margins absorbing some of the inflationary pressures weighed on equities. Especially as the momentum and revisions of European earnings expectations have weakened lately.

MFS: No change in the pace of cutting before early 2025

By Annalisa Piazza, Fixed Income expert, MFS

The ECB cut interest rates by 25bp at today’s meeting, with no major surprises on the communication on future steps. There is no willingness to signaling that the time for accelerating the policy normalization has arrived (yet) as tensions within the Governing Council probably remain very high, with the hawks still worried about pass-through of past high wages on inflation expectations. As such, data dependency is re-affirmed.

The ECB reiterated inflation will mechanically move higher in Q4 and so will negotiated wages so we can still see a December cut with some of these variables optically moving in the ‘wrong’ directions. We are indeed expecting the next cut in December. The bar for an October cut is currently high as there will not be enough data to justify a back-to-back move.

During the press conference, Lagarde broadly stuck to the script and she clearly didn’t want to show any major shift in the ECB mindset. The collective view of the Governing Council is probably still skewed to a degree of caution as indications coming from some inflation components are still not fully satisfactory. We expect it will take a few months of data to confirm tentative signs of moderation across the majority of inflation variables become the trend. As such, we don’t expect any change in the pace of cutting before early 2025.

From a market perspective, the curve is already pricing in slightly less than 150bp cuts in 12-month time, which is broadly in line with our projections. The recent steepening in the EGBs curves might take a ‘breath’ in the next 3 months or so but we suspect markets will be very sensitive to future comments by the ECB GC members as it is quite possible there is a wide range of views on the next steps, given the overall weaker economic picture.

Fidelity International: ECB likely staying on hold in October

By Salman Ahmed, Global Head of Macro and Strategic Asset Allocation, Fidelity International

As expected, the ECB delivered another 25 basis point (bps) cut, leaving the deposit rate at 3.5%. The messaging in the statement and the press conference was broadly unchanged with continued strong data dependency and no pre-commitment for any specific future rate path. New staff-projections released showed slightly weaker growth across the forecast range along with higher core inflation for this year and the next. Although growth remains weak, as we are picking up from the signal in our activity trackers, the ECB remains more focused on inflation, which is its single mandate, and that has remained sticky particularly due to elevated wages and services inflation.

We see the next opportunity to assess this stance to be in December when the ECB has better visibility on wage growth in Q3-24. Accordingly, we expect the next 25bps cut to come in December, with the ECB likely staying on hold in October, which is more hawkish than the market is pricing. However, if wage growth continues to decelerate quicker than expected, we would expect clearer guidance towards a series of cuts that opens an accelerated pace of cuts in 2025 from currently one a quarter.

BlackRock: ECB is dancing the waltz rather than a quick step

By Ann-Katrin Petersen, Investment Strategist, BlackRock Investment Institute

The ECB cut rates by 25 basis points today, as expected, having revised down its growth projections but still expecting inflation to fall to its 2% target in the second half of 2025. We think the ECB could cut again this year as rates are still highly restrictive. But we think market speculation of another cut next month is optimistic. 

Sticky inflation means only a further sharp economic deterioration would prompt the ECB to speed up from quarterly, quarter-point cuts, in our view. We prefer income in short-dated euro area bonds over short-dated US Treasuries.

A second cut, but more a waltz than a quick step

As expected, the ECB cut rates by 25 basis points today, supported by fresh macro projections (lower growth, broadly stable inflation outlook). It’s the ECB’s second cut after initiating the easing cycle in June. President Lagarde reiterated that the ECB would follow a “data-dependent, meeting-by-meeting approach”, and did not rule out an October cut. We think the ECB will stick to a quarterly pace of cuts this year – dancing the waltz rather than a quick step. For now, only a further sharp economic deterioration would prompt the ECB to speed up with back-to-back or larger cuts, we think. And we will only have a little more data in October and a lot more in December. We think the ECB will prefer to proceed slowly, at least until it can confirm its assumed return of inflation to its 2% target in the second half of 2025 and wage growth moderates further.

Sticky inflation means policy will stay tight

Like the hiking cycle, this is not your typical cutting cycle: This is not a return to the world we once knew, where inflation was consistently well below the 2% target. With labour markets still tight and productivity weak, domestic price pressures could keep inflation near or above 2%, even if we think wage growth will cool further from current (still too high) levels. Given the ECB raised rates to highly restrictive levels, a steady pace of rate cuts over coming quarters would still leave policy weighing on growth. That’s even after accounting for what is likely now a higher neutral policy rate due to structural shifts.

No big surprise for markets

After today’s ECB meeting, markets still see a reasonable chance of an October cut. Investors should keep the big picture in mind: rates will likely stay structurally higher than before the pandemic, supporting the appeal of income. On a tactical horizon, we now prefer income in short-dated euro area bonds and credit over short-dated US Treasuries. We think market expectations of Fed rate cuts have gone too far. We remain tactically neutral long-term euro area government bonds as we think yields will keep swinging in both directions on new economic data. We continue to favour U.S. stocks over Europe’s on stronger corporate earnings and the AI theme.

GSAM: Possible faster easing cycle to lower terminal rate

By Gurpreet Garewal, Macro Strategist Global Fixed Income, Goldman Sachs Asset Management

Today's 0.25% cut in policy rates by the ECB was widely expected by market participants. With limited economic data expected by October's meeting, we do not foresee another cut until December, unless there is a significant deterioration in regional or global growth.

Looking further ahead, a faster easing cycle towards a lower terminal rate could occur earlier than current market pricing suggests. Over the summer, tourism, sporting events, and concerts boosted activity and inflation in the services sector, but both are expected to cool as the seasons change. Slowing wage growth has the potential to slow services inflation, which combined with growing downside growth risks, may prompt ECB officials to accelerate the pace of normalisation in 2025, compared to the quarterly pace adopted in 2024.

DWS: ECB stays the course, next rate cut in December

By Ulrike Kastens, European Economist, DWS

The ECB delivered today, easing the monetary brake further. This was certainly appropriate, given the growing confidence in the achievement of the inflation target, which was also reflected in the unchanged inflation projections for 2024-2026.

While there are still uncertainties regarding the future development of services prices, economic concerns are likely to become more important, given the weakness of domestic demand. In July, the risks to the economy were already seen as tilted to the downside.

The GDP forecasts for the years 2024 to 2026 have also been revised downwards and the current economic situation is assessed as worse than in July. The ECB continues to maintain its data-dependent approach and ECB President Lagarde firmly rejected any pre-committing of an interest rate path. However, she also stated that a declining path of rates was pretty obvious. So, further rate cuts are in the pipeline. December is likely to be the next date for another cut. Overall, we expect the deposit rate to stand at 2.50 percent in 12 months' time.

Carmignac: When the ECB & Fed diverge

By Kevin Thozet, member of the investment committee, Carmignac

The European Central Bank (ECB) faces a conundrum

Weak economic growth, lower wage inflation data and contractionary leading indicators all hint at a further decrease in inflation across the euro area. Yet, services and domestic inflation – stubbornly stuck in the region of 4% - weigh against it, or at least entertain some form of doubt on the path ahead.

A 0.25% cut was the plan, but Lagarde is avoiding committing to a monetary policy path. And with the Frankfurt institution revising its 2024 inflation projections on the upside and growth expectation to the downside, we don’t expect clarity soon. Data dependency remains central.

The Federal Reserve (Fed) reaches a historic moment

In the US, economic growth and consumption remain resilient, but inflation is approaching the Fed’s target and the softening labour market means the door is open for gradual normalisation of policy rates, to reduce the restrictiveness of its monetary policy.

Having maintained its Federal Funds Rate in the 5.25%-5.50% target range for more than one year, we expect the Fed to initiate its cutting cycle next week with a 0.25% cut. With just two more meetings this year (November and December), an updated ‘dot plot’ (Fed members’ projections of policy rates) is likely to show it sticking its neck out over the short-term path for interest rates.

We expect the dot plot to signal two additional cuts by year end, along with Powell hinting he could go big if needs be. Indeed, any signal hinting the Fed is ‘behind the curve’ would likely see it moving with a jumbo cut of 0.5%.

Not all cuts are created equal

The ECB has already made a 0.25% rate cut this month, and the Fed is likely to follow suit next week. But their future actions might not be so synchronised.

The ECB has to deal with a precarious balancing act. Inflation has come down more than wages, and yet consumer confidence is showing little signs of improvements. Both economic growth and productivity  data are weak and prospects of fiscal austerity are mounting for 2025.

So, contrary to the Fed, which has paved the way for a full blown loosening cycle, the risk for the ECB is a possible “one and pause” or “one and one” cycle.

This divergence is clear in bond markets, with EUR rates underperforming their USD counterparts. Further, a different monetary policy path, also raises questions over the possible appreciation of the euro, which won’t help the competitiveness problems of region. This is also happening as growth is stalling – which is particularly bad timing.

The ECB must eventually resolve to do more than the six cuts priced over the next twelve months. But the risk is they do so later, rather than sooner, with the adverse impact of the time lag between policy and real economy effects, notably on the jobs market.

Investment implications

The policy rate cutting cycle has begun.

Fixed income markets are expecting policy rates in the euro area to go back to 2.0% within the coming year, while long-term core sovereign bond yields currently stand at 2.20%. In the US, policy rates are expected to land a touch below 3.0% while the 10-year hovers a mere 0.6% above at 3.6%.

Such a context pleads for some form of caution on long-term sovereign markets. Indeed, central banks are proactively cutting rates to avoid damaging the economy, while supply remains heavy. And, with quantitative tightening ongoing (further reducing the demand for bonds in the market), the risk is upward pressure on sovereign yields. Besides, some inflation premium seems warranted, as central banks lower policy rates even though inflation hasn’t come back to the 2% target yet.

In contrast, shorter-term sovereign bond markets appear more appealing. Should fears of a more serious economic slowdown resurface, markets would price a more aggressive cutting cycle and hence lower short-term yields. This central bank ‘put’ on cyclical risk is one of the reasons for our preference, among risky assets, for corporate credit and emerging markets.

Indeed, as the cutting cycle has started, the short end of yield curve is inverted (reflecting expectations of more cuts down the line), but the curve becomes positively-sloped from the five-year maturity point, as concerns about supply risk and sticky inflation become prevalent beyond that point. Between negative roll yields on the short-end, and term premium uncertainty on the long-end, this cup-shaped curve is wholly unappealing to investors.

Credit markets provide an antidote to this treacherous yield curve configuration. Indeed, the credit spread curve is positively-sloped across the maturity spectrum, and therefore enables investors to mitigate the negative slope in governments bonds, making the yield curve for corporate bonds much more attractive.

In emerging markets, we believe that the inauguration of a Fed cutting cycle will enable local central banks to cut rates more aggressively than currently priced. Real rates are too high for these economies where disinflation is more advanced than in developed markets.

PIMCO: ECB op koers voor geleidelijke renteverlagingen

Door Konstantin Veit, Portfoliomanager, PIMCO

De Europese Centrale Bank (ECB) heeft haar depositorente met 25 basispunten verlaagd naar 3,50%, maar committeerde zich niet expliciet aan verdere renteverlagingen. De volgende stap wordt echter in december verwacht, mede aangemoedigd door recente economische cijfers die suggereren dat de inflatie in 2025 de doelstelling van 2% duurzaam kan bereiken.

De tweede renteverlaging van dit jaar toont aan dat de ECB ervan uitgaat de inflatie tegen het vierde kwartaal van 2025 onder controle te hebben. Hoewel de ECB geen haast lijkt te hebben met verdere verlagingen, wil zij de rente ook niet te lang op een te hoog niveau houden vanwege de zwakke economische groei. De ECB wil een restrictief beleid handhaven zolang de binnenlandse inflatiedruk hoog blijft, vooral door aanhoudende prijsstijgingen in de dienstensector.

December: derde verlaging op komst

PIMCO verwacht een derde renteverlaging in deze cyclus in december, met een uiteindelijke rentestand van ongeveer 1,9% tegen eind 2025, als gevolg van geleidelijk afnemende ‘last mile’-inflatiezorgen. De ECB zal volgend jaar waarschijnlijk de geschikte neutrale beleidsrente bespreken, als de beleidsrente onder 3% duikt.

Productiviteitsgroei

Om de inflatie in overeenstemming met de verwachtingen van de ECB te krijgen, is het van essentieel belang dat de arbeidskosten per eenheid product vertragen tot 2%, gedreven door de loon- en productiviteitsgroei. Lonen stijgen minder hard dan verwacht, en de toekomstgerichte loonindicatoren van de ECB blijven wijzen op een solide vertraging in 2025. De productiviteit blijft zwak, maar ontwikkelt zich grotendeels in lijn met de verwachtingen.