ECB – the double rate cut
The ECB is likely to cut the deposit rate by 25 basis points in the coming week.
Commerzbank Economic Research
09/06/2024
The double rate cut in September
An interest rate cut by the ECB next week should come as no surprise to anyone. Markets have already fully priced in such a move, and all analysts surveyed by Bloomberg expect it. Firstly, inflation fell significantly from 2.6% to 2.2% in August. Even if this was largely due to lower energy prices, the ECB is likely to see this as a positive sign. Secondly, according to ECB data, collective wages in the eurozone rose by 3.6% in the second quarter, which was noticeably slower than in the previous five quarters, when they had risen by more than 4% and in some cases even by just under 5%. Thirdly, some members of the ECB's Governing Council are becoming increasingly concerned about the weak economy. To summarize, the governor of the Banque de France, Villeroy de Galhau, recently stated in an interview : “It would be fair and wise to decide on a further rate cut.” In this respect, the deposit rate is likely to fall by 25 basis points to 3.50%.
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