Xinhua News Agency, Frankfurt, January 25th: Summary｜The European Central Bank is in no rush to announce a timetable for interest rate cuts
Xinhua News Agency reporter Shao Li
The European Central Bank held a monetary policy meeting on the 25th and decided to keep the three key interest rates unchanged. Its latest monetary policy resolution and statement did not provide clear clues on interest rate cuts.
The European Central Bank issued an announcement on the same day saying that the main refinancing interest rate, marginal lending rate and deposit mechanism interest rate will remain unchanged at 4.50%, 4.75% and 4.00% respectively.
The European Central Bank stated that the rebound in the Eurozone inflation rate in December last year was mainly caused by the reduction of subsidies for natural gas, electricity and food by many European governments at the end of last year, and the overall downward trend in inflation has not changed. However, rising wage growth and falling labor productivity have kept price pressures high.
ECB President Christine Lagarde said in response to reporters’ questions that day that Governing Council members generally believed that it was “too early to talk about cutting interest rates” and that the ECB would insist on relying on data to make decisions. Lagarde said that the euro zone’s economic growth has stalled and the risk of a new round of inflation is low. Falling profits have begun to cushion the impact of rising labor costs on inflation.
Carsten Brzeski, head of ING’s macro research department, believes that the latest decisions and statements of the European Central Bank are almost a copy of the last meeting. He predicts that the first interest rate cut in the euro zone will not occur before June this year.
Lagarde said during the World Economic Forum’s 2024 Annual Meeting last week that investors need to be patient about interest rate cuts and that the European Central Bank may not propose guidelines for interest rate cuts before the summer.
Some analysts pointed out that the euro zone is currently on the verge of recession. If inflation fails to decline further, the European Central Bank may not be able to adjust interest rates to stimulate the economy, leading to stagflation, a phenomenon in which inflation continues to rise and growth is weak for a long time.
Michael Holstein, chief economist of Germany’s Bundesbank, believes that even if the euro zone economy is weak and may continue to weaken, the European Central Bank will wait until at least the summer to cut interest rates for the first time because its first priority is to stabilize prices.
Many experts also believe that the European Central Bank’s latest monetary policy statement is slightly “dovish” and may be preparing for an interest rate cut.
Frederic Dicroze, an economist at Swiss Pictet Asset Management, said that Lagarde did not strongly refute market expectations for an interest rate cut that day, sending an important signal that the possibility of an interest rate cut in the euro zone before the summer has increased. Increase.
Goldman Sachs Group and Deutsche Bank expect the European Central Bank to cut interest rates for the first time as early as April this year. Société Générale doesn’t expect a rate cut until this fall.
Ulrich Cattell, chief economist of Deka Bank in Germany, said that the interest rate cut will not be as early or as large as some market investors expect, and a small interest rate cut in the euro zone is the most likely scenario.
2024-01-26 06:30:38
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