Multiple cuts still on the horizon, but any move before June looks very unlikely.
7 March 2024
A more optimistic outlook on inflation from the governing council of the European Central Bank (ECB) at their latest meeting sees markets now pricing in 1% cuts by the end of this year. This is a slight increase from just before, but only by a few basis points in what is seen as a fairly dovish hold by the ECB as they stand pat on interest rates.
The council expect that the inflation target of 2% will be reached in 2025 but, when questioned on inflation in the post-meeting press conference, the ECB President Lagarde was quick to point out that while the council was more confident on the outlook, they still are not sufficiently confident to begin cutting rates. The wonderful world of central bank doublespeak. What we should assume is that no rate cuts are happening until June at the earliest – whether we achieve four cuts this year is still something of an unknown.
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The information in this document is given for information purposes only and does not qualify as investment advice. Opinions and assessments contained in this document may change and reflect the point of view of GAM in the current economic environment. No liability shall be accepted for the accuracy and completeness of the information. Past performance is not an indicator for the current or future development.