DWS: ECB will cut interest rates by 25 basis points in June

DWS: ECB will cut interest rates by 25 basis points in June

7 maart 2024

Rente ECB
Rente (kalhh, Pixabay)

Ulrike Kastens, European Economist at DWS, comments on the ECB meeting:

'The ECB is sticking to its current course and remains data dependent. However, compared with the statements made at the last ECB meeting, much more progress has been made in the fight against inflation. This is reflected in the new projections for inflation, which suggest that the inflation target will be reached as early as 2025.

However, the ECB needs more data, especially on wage and service price developments. It is true that there are early signs of a moderation in wage developments. Overall, however, according to ECB President Lagarde, there is not yet enough data to be confident that the inflation target can be achieved in the long term. She therefore stressed several times that this was more likely to be the case at the June meeting than in April.

In our view, key rate should then fall by 25 basis points to 3.75%. It also became clear that data dependency will remain high even during the normalisation of monetary policy. We still expect the ECB to lower key rates only gradually, in three steps, by a total of 75 basis points this year.'

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