Sources The ECB will not turn dovish until March and will not cut rates until June

Mondo Social Updated on 2024-01-30

**: Zhitong Finance App

ECB policymakers are not expected to change their decision to raise interest rates before the March meeting, and it will be difficult to cut rates by June, according to seven people familiar with the matter.

The European Central Bank (ECB) held interest rates at record highs on Thursday and pushed back to a narrow response from bets that the ECB would cut rates as soon as March.

The ECB needs to pay attention to the data between now and its March 7 meeting as early as next year, and then it will not consider anything like what the Fed did last week, the sources said"** "pivot, leaving the door open for future rate cuts.

Most of the key wage data for the year will be released by June next year, and it will be more difficult to gauge the issue of interest rate cuts before that, the people said.

This is at least two months later than the market expected. Policymakers have also been concerned about this disconnect at last week's ECB interest rate meeting.

This difference can be boiled down to different perceptions of inflation. While many investors believe that inflation will continue its recent significant downward trend, most ECBs** believe that this situation is only temporary.

If inflation persistently falls below expectations, a rate cut is likely even before June, a source said.

However, the ECB should push back more forcefully against traders' arguments, as the bank has raised interest rates 10 times in a row in one and a half years, and the effectiveness of this tightening measure is at risk of being offset by the market, according to two other sources.

Lagarde said last Thursday that the central bank would"Rely on data"It's not"Dependent on time"This view is shared by other policymakers.

Some of the ECB's public comments on Friday also suggest that they are in no hurry to cut interest rates.

Bundesbank President Joachim Nagel said it was too early to draw conclusions about inflation, and his Austrian colleague Robert Holzmann rejected questions from journalists about the timing of the rate cut.

Bank of France President François Villeroy de Galhau said the ECB's next move was to lower borrowing costs, but he also insisted that the central bank would do so at interest rates"Plateau"Stay for a while and"Enjoy the scenery"。

Money markets are pricing in a 50% chance that the ECB will cut rates by 25 basis points for the first time in March, followed by a rate cut at every meeting up to December next year.

This will allow the ECB to increase the bank deposit rate from the current 40% to 2 by the end of next year5%。

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