Danske Bank no longer forecasts that the European Central Bank will cut interest rates in September, citing stubborn inflation and a strong start to 2024 for the euro zone economy.
Piet Christiansen and other analysts at the bank said in an emailed report that the European Central Bank will cut interest rates in June, as widely expected by the market, and cut borrowing costs again in December.
They said recent data meant the ECB could wait a while before launching a series of rate cuts.
As the long-term decline in the manufacturing industry comes to an end, the service industry continues to maintain strong momentum. The euro zone\’s economic growth exceeded expectations in the first quarter.
Given that the labor market remains strong and wages are rising higher than expected at the beginning of the year, the market is worried that it may take longer for inflation to return to 2%.
We believe the resilience of the European economy is evident. Christiansen wrote in the report.
He believes that the rate cut in June will be similar to the insurance rate hike last September. After that, the European Central Bank will repeat its interest rate path of relying on data and making decisions on a meeting-by-meeting basis.
The European Central Bank\’s last rate hike last fall was controversial. Not all Governing Council members believed it was necessary. But they ultimately agreed that the risks of halting rate hikes prematurely were too high.
Danske Bank says there will be no further interest rate cuts in September after the European Central Bank cut interest rates in June
Danske Bank no longer forecasts an ECB interest rate cut in September, citing stubborn inflation and a strong start to 2024 for the euro zone economy
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