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Economy

Why the ECB will cut twice more in 2024

ANZ Institutional Insights

2024-06-19 00:00

The European Central Bank remains on an “easing path” when it comes to the interest rates, according to ANZ’s Head of G3 Economics Brian Martin – but ANZ Research has pulled back its expectations of cuts this year to just two more.

Speaking to ANZ’s 5 in 5 with ANZ podcast, Martin said now expects the euro area central bank to move lower on rates in September and December – down from a previous forecast of three additional cuts in 2024.

Euro-area inflation data showed prices grew 2.6 per cent in May, compared to 2.4 per cent in April. Wage growth data rose 4.7 per cent in the first quarter of 2024.

ANZ Research has therefore dialled back its expectations for euro-area rate cuts, Martin told 5 in 5, and “now anticipates two 25 basis-point rate cuts in the second half of this year”.

“In total that would mean that you’re getting three rate cuts this year,” he said. “The ECB is definitely, we think, embarking on an easing path. But it's not going to rush into rate cuts.”

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In June, the ECB became one of the first major central banks to lower official interest rates in this economic cycle, moving 25 basis points to 3.75 per cent. The bank cut rates despite also revising their inflation forecasts higher for 2024 and 2025.

 

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Why the ECB will cut twice more in 2024
Staff writer
ANZ Institutional Insights
2024-06-19
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