FRANKFURT (Reuters) – The European Central Bank is expected to keep interest rates unchanged on Thursday while signalling it still plans to cut rates again in September, although the institution may use relatively vague and cautious rhetoric.
As expected, the ECB cut rates by 25 basis points in June, its first cut in borrowing costs since the start of the monetary tightening cycle launched in July 2022 to curb soaring inflation.
While some central bank officials have called the move hasty, the ECB is likely to be more cautious about cutting rates again, especially in a context of still-high inflation.
The president of the institution, Christine Lagarde, is expected to stress on Thursday that price pressures are easing but that risks remain, to call for temporization and additional data before any new rate cuts.
That’s the gist of the message she’s been getting across in recent weeks, suggesting that Thursday’s meeting could be the clearest in years, with attention already turning to the September meeting.
“The ECB is expected to communicate that it continues to believe that inflation is falling and that it will be able to ease monetary policy further overall,” said Peter Schaffrik, strategist at RBC Capital Markets.
Two more rate cuts are anticipated by the markets by the end of the year, and five more next year, prospects that have not been contradicted by ECB officials in recent weeks.
(Balazs Koranyi and Francesco Canepa; Jean Terzian)
Copyright © 2024 Thomson Reuters
I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
