Columbia Threadneedle: High chance of ECB interest rate cut in early June

Columbia Threadneedle: High chance of ECB interest rate cut in early June

7 maart 2024

Rente ECB
europese centrale bank (ECB).png

Dave Chappell, Bond Strategist at Columbia Threadneedle, responds to the ECB meeting:

'Whilst today’s ECB statement indicated a willingness to maintain the current rate stance, the downgrading of core inflation forecasts, and less than subtle signals from President Lagarde during the press conference, reinforced the market expectations that the first reduction will occur in early June.

Explicitly acknowledging still elevated domestic price pressures, in part due to strong wage growth, gives the committee cover to hold off commencing the removal of historically tight policy as soon as the April meeting, without completely ruling it out.

With the growth outlook downgraded in the near term, and core inflation at target in the medium term, the approximately 100bp of cuts currently priced by year end will look insufficient, if wage data over the coming months surprises to the downside.'

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