Interest rates in 2024, when will they fall?

“When the ECB starts cutting interest rates, it won't be a single decision, however Most likely a sequenceThis came in an interview conducted by the Corriere della Sera newspaper with Philip R. Lin, chief economist and member of the Executive Committee of the European Central Bank, stressed that “progress has been recorded on inflation in recent months,” a phenomenon that cannot be quantified. “The increase in September definitely contributed.”

He adds: “I recognize that there is an insurance element in this rate hike. I will take that fully into account in terms of the size and timing of the interest rate adjustment towards a more neutral monetary policy stance when the time comes.” “Continued progress in easing core inflation is welcome,” he adds. “But we see some headwinds in services inflation this year, and right now, wages are still growing well above any kind of long-run equilibrium rate.”

Inflation trend

“If inflation is confirmed to return to 2%, it would be appropriate to normalize interest rates“This will help reduce public debt costs,” says the ECB's chief economist. But to get there, you have to stick to your guns and make sure the inflation problem is completely defeated. The history of periods of high inflation tells us that if central banks try to normalize too quickly, before the problem is actually overcome, another wave of inflation arrives and thus another wave of higher interest rates. That would be a much worse scenario. It is therefore important to take your time and make sure there is sufficient indication that inflation is returning towards target. False hope, too quick a review, can be self-defeating. “We don't want to tighten policy too much and keep interest rates too high for too long. But it is equally important that we do not move too quickly from the waiting position we have been in since September. Moving from here to active interest rate normalization will be an important discussion.” “But it's still very early, and we don't yet have enough evidence to move to the next stage.”