by Balazs Koranyi and Francesco Canepa
FRANKFURT (Reuters) – The European Central Bank is set to cut interest rates again on Thursday, amid lingering inflation risks and a slowing euro zone economy, as investors await signs of further cuts ahead.
The ECB’s president, Christine Lagarde, is expected to stick to the ECB’s recent position that decisions are taken on a meeting-by-meeting basis based on economic data.
However, it could also leave the door open to a further rate cut as early as October, even though some conservative officials are advocating slower monetary easing as inflation in the 20 eurozone countries remains above the 2% target.
“All eyes will be on any messages regarding the future of monetary policy, particularly the likelihood that another 25 basis point cut will be announced as early as October,” commented Antonio Villarroya, economist at Santander.
On the one hand, within the ECB, some are likely to point out that the risks of a recession are growing and that current monetary policy is harming growth more than necessary, with inflation having moved closer to the 2% target.
But on the other hand, the majority “hawks” are likely to stress that the labour market remains too tight for the ECB to sit back and that underlying price pressures are fuelling the risk of a resurgence of inflation.
(Balazs Koranyi; 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.
