11 April 2024
If you are covering the ECB's latest interest rate decision, please see the following comment from Richard Carter, head of fixed interest research at Quilter Cheviot:
“The European Central Bank has predictably opted to hold rates once more. While for the first time it has signalled a clear intention to begin cutting rates if inflation continues to head in the right direction, which could potentially come as soon as June, it stopped short of pre-committing to this.
“Inflation appears to be better behaved and less sticky in the Eurozone than it has been elsewhere, particularly when compared to the US where just yesterday we saw another unwanted uptick which took headline inflation to 3.5%. Given the Federal Reserve is now expected to resist making any cuts for some time yet, and the Bank of England faces a difficult balancing act, the ECB could well be the first to make a move.
“Nonetheless, the ECB has maintained its data dependent approach and should something change between now and its next interest rate decision then we could see it row back on this more positive outlook. It will be keeping a close eye on key data between now and its 6 June meeting, particularly the crucial wage data which has been running well above the 3% target the ECB has stated would be conducive with its inflation target.
“The ECB was criticised for being a rate hike laggard when the central banks first began their respective hiking cycles, but time will tell whether it will be the first to switch stance and start bringing rates back down.”
