Data the ECB keeps an eye on

Market participants are engaged in a fierce debate over what will happen to the ECB's key interest rates in the coming months

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Dr Marco Wagner

Commerzbank Economic Research

July 2 2024

We discuss which indicators eurozone central bankers are likely to pay attention to and which of them could spark further controversy.

Attractive new inflation projection

The ECB's main focal point will continue to be inflation and whether it develops following expectations. President Lagarde already discussed official projections during the press conference at the March meeting. She expects continuous ups and downs caused by a number of special effects over the coming months. The ECB economists have already accounted for this belief in their projections. By now, particularly forecasts for the fourth quarter of 2024 and the first quarter of 2025 have been raised. Meanwhile, estimations stipulating a fundamental downward trend have been left unchanged so that the 2% inflation target would finally be reached in the second half of 2025. From the doves' perspective, this new projection is especially attractive since outcomes could still be consistent with expectations even if actual inflation picks up again towards the end of the year provided inflation stays low over the summer. Considering this, even the one or other hawkish council member could get convinced of further interest rate cuts. With this in mind, the Lithuanian Šimkus , whom we classify as belonging to the hawkish camp, signalled at a press conference the day after the rate cut: "If economic developments match those in the forecasts, this will mean less and less need for restrictive monetary policy."

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