BlackRock: Response to ECB interest rate decision

BlackRock: Response to ECB interest rate decision

7 maart 2024

Rente ECB
ECB.jpg

Ann-Katrin Petersen, Investment Strategist at BlackRock, responds to the ECB's interest rate decision:

'The ECB’s updated macro projections showed downward revisions to near-term economic growth and particularly inflation – with core inflation settling close to target in 2025. As the energy shock unwinds and past ECB rate hikes bite more than the Fed’s are biting in the U.S., we expect headline inflation to fall to – or even temporarily undershoot – the ECB’s 2% inflation target in 2024.

But we still don’t think this is a return to the world as we knew it, where inflation mostly undershot the 2% target in the euro area. With a still tight labour market and subdued productivity, domestic price pressures could keep inflation near or above 2%, as reflected in the ECB’s updated projections. As a result, rates will likely be structurally higher than before the pandemic.

oday’s decision is unlikely to catch the bond markets off guard, which in recent weeks have pushed out ECB rates cuts. That meant the bar was lower for Madame Lagarde to strike a less hawkish tone than markets. We expect continued volatility in bond markets and stick to our tactically neutral stance on euro area government bonds.'

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