Will the ECB be the first to start a cycle of interest rate cuts?Will the ** on inflation be lowered next year?
According to foreign media, the European Central Bank is expected to announce on Thursday that interest rates will remain unchanged, but before that, there are still several issues to consider.
As energy *** Eurozone inflation has continued to slow down this year, inflation has fallen to 2 in November4%, which seems to be just one step away from the "last mile". The ECB previously seemed to have underestimated the pace of the decline in inflation. In September, ECB** inflation will remain above 3% until the fourth quarter of next year.
Krishna Guha, Vice Chairman of Evercore ISI, said:
"The data suggests that the ECB has overtightened. ”Deutsche Bank economists expect that on Thursday,The ECB will change its assessment of core inflation in 2024 from 29% to 21%
Last week, the ECB's "big hawk" Isabel Schnabel spoke acknowledging that the "encouraging" cooling of inflation had changed the mood of policymakers, but she also said:
"We still need to see further progress on underlying inflation. ”The Bundesbank said it expects inflation to fall closer to 3% again in December due to the country's energy compared to last year.We cannot prematurely declare victory over inflation. ”
As the largest economy in Europe,German inflation** could push inflation back up in the Eurozone
Frederik Ducrozet, head of macroeconomic research at Pictet Wealth Management, believes that interest rate cuts will start in April next year, and he believes that the ECB has not been aware of the strength of this round of inflation, so it is natural that it is reluctant to prematurely declare that the "fight against inflation" has been won.
He said
"Inflation** will provide some breathing room for the ECB before it needs to cut rates. ”**Scale,The biggest impact on headline inflation is the level of wages
As wages are a key factor affecting services**, services are labour-intensive and account for 44% of the eurozone's inflation basket.
And the eurozone inflation in the third quarter showed that the hourly unit labor cost was **6 year-on-year8%, the fastest pace since records began in 1995.
As a result, the ECB could be hoping for a collective bargaining agreement with unions in early 2024 and a further squeeze on profit margins.
Konstantin Veit, portfolio manager at investor PIMCO, said:
"The ECB needsSee unit labor costs and profit margins fall to align with their goals, which is still inconclusive, so they will wait for more clarity next spring. ”The ECB ended buying most of its bonds last year, but will still reinvest maturing proceeds into a €1.7 billion portfolio it had previously purchased in response to the pandemic.
According to **, the ECB has made plans to continue reinvesting at least until the end of next year, which means:The ECB will buy about 180 billion euros of bonds in 2024
ECB President Christine Lagarde said last month that discussions would be held "in the near future".Some expect the ECB to start reducing its bond purchases in April next year.
Hawkish members of the ECB called for an early end to reinvestment, however, Schnabel said it seemed "no big deal" as this part of the bond purchase would end anyway and in a "relatively small amount".
Wall Street news, welcome **app to see more.