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The European Central Bank (ECB) will not be rushed into further rate cuts, according to ANZ’s Head of G3 Economics Brian Martin, who expects the bank to closely monitor further data before making its next decision.
During its June Governing Council meeting, the ECB became the first major central bank of the economic cycle to lower official interest rates. The bank cut rates by 25 basis points to 3.75 per cent from 4 per cent, a level it had maintained since September 2023.
ECB president Christine Lagarde made it clear the bank was committed to a disinflationary path and the move was justified by confidence in the path ahead.
Speaking on the 5 in 5 with ANZ podcast, Martin said the ECB was keeping an eye on the future.
“I think it’s very clear that the ECB is not going to rush into rate cuts,” he said. “The decisions will be guided by the evolution of wage data, services inflation and… underlying inflation going forward.
“It was interesting that the ECB did cut rates despite revising up their inflation forecasts for 2024 and 2025.”
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5 in 5 with ANZ is a daily financial markets podcast featuring the latest news, trends and insights from ANZ economists based around the world.
Hosted by New Zealand-based journalist Bernard Hickey, 5 in 5 with ANZ explores market trends, insights, and data releases in a way that arms listeners with the information they need to start the day.
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You can click here to find out more and listen to the latest episode.
The ECB move follows a cut from the Bank of Canada (BoC) earlier in June. The BoC reduced rates by 25 basis points to 4.75 per cent and said it was “reasonable to expect further cuts” if inflation eased.
Listen to the podcast to find out more.
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