ECB Expected to Maintain Rates as Eurozone Inflation Persists
(MENAFN) Experts suggest the European Central Bank (ECB) may have concluded its cycle of interest rate reductions, with no cuts expected at its upcoming meeting this month amid steady eurozone inflation and a gradual economic recovery.
All attention in Europe is focused on the ECB’s monetary policy announcement this week, with ECB President Christine Lagarde’s remarks expected to provide insight into the bank’s future strategy.
Bas van Geffen, senior macro strategist at Dutch Rabobank, told Anadolu that data since the September meeting have been limited, noting that “the doves may cede their push for a cut fairly quickly this month.”
He added that he does not anticipate a policy shift or fresh guidance from Lagarde’s speech, stressing that a more detailed discussion will take place in December, once additional data are available.
“We believe the ECB’s cutting cycle is done, but additional easing requires a materialization of significant downside risk, and we maintain that the ECB’s cutting cycle is effectively done,” he said. “The ECB also holds in December, the odds that the next move will be a rate hike increase substantially.”
Marco Wagner, senior economist at Commerzbank, told Anadolu that the ECB is very unlikely to alter key interest rates, citing persistent supply chain bottlenecks that continue to drive inflationary pressure.
“According to the ECB survey, consumers currently expect inflation to exceed the 2% target,” he said.
Peter Vanden Houte, chief economist at the ING Group, told Anadolu that data since September, when the ECB last met, have been inconclusive, with August consumption and industrial output described as “disappointing.”
He noted that the October Purchasing Managers’ Index (PMI) signaled steady growth despite ongoing challenges in manufacturing.
“Headline inflation in September did exceed the ECB’s 2% target for the first time since April, but we know that energy prices will push inflation below 2% again in the next few months; so, all in all, the picture of a steady, albeit subdued, recovery continues to hold,” he said.
“In these circumstances the ECB has little reason to alter monetary policy. We believe that interest rates will remain unchanged, with President Lagarde reiterating that the ECB is still in a good place,” he added.
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