Live Markets: Could June be too early for an ECB rate cut?

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26/02/2024 11:15

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    COULD JUNE BE TOO EARLY FOR AN ECB RATE CUT?
    Some analysts recall that ECB Joachim Nagel said on Friday
that he was more comfortable with the current money markets
pricing, which discounts 100 basis points of rate cuts by
year-end, with a first move in June.
    The ECB repricing looks now "better aligned with recent ECB
rhetoric," Rainer Guntermann, rates strategist at Commerzbank,
says after quoting Nagel and ECB president Christine Lagarde.
    However, Nomura economists focused on the remarks of another
prominent hawk, Isabel Schnabel.
    They noted that Schnabel stated in the slides of her speech
that service inflation remains very sticky, wage growth is
strong, and the transmission of monetary policy has peaked,
while the economic downturn has bottomed out.
    Put another way, it could look like Schnabel might even be
calling for a further rate hike. 
    However, given that she said months ago that such a move was
unlikely, she’s probably supporting "rates being kept around
current levels for longer," Nomura economists say.
    "The question is whether she would even support a rate cut
in June, or is that even too early for her?" they add.
        
    (Stefano Rebaudo)
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