Thursday, July 18, 2024

The European Central Bank is likely to stop cutting interest rates as early as July, but will cut them twice more in 2024.


Jung building – Chief Economist Mirapod Asset Management – Confirms that the latest communication from the European Central Bank is clear In contrast to the interest rate cut in JulyIn his opinion, with the head of the Central Institute, Christine Lagarde, who stressed that “it will take time” to obtain sufficient data to confirm that we are facing Limiting the risk of over-target inflationThe message is quite clear: A second cut in July has become less likely..

Moreover, Jiro Young, chief economist at the ECB, pointed out that “June inflation data does not answer the ECB’s questions on services inflation,” confirming President Christine Lagarde’s comments.

“We do not expect another rate cut to be announced this month, but we believe there will be two more cuts later in the year.”“As the economy slows, demand pressures are easing and services inflation is also expected to decline,” Jiro Young posits. Regarding the latest inflation data, the expert explains that the fact that core CPI inflation remained unchanged – close to 3% – is in line with this view.

In detail, the expert monitors how the overall inflation rate rose by 2.5% compared to June 2023, with food, alcohol and tobacco prices rising at the same rate (2.5%). However, Services inflation remains strong.Up 4.1% year-on-year, unchanged from the previous month.

For monetary policy, the key issue remains determining whether higher utility prices are temporary or more structural, says Jero Young, who concludes: This is a temporary measure, and we expect a tighter monetary policy approach in the future.

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Karen Hines
Karen Hines
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