ECB holds rates steady, hints at future cuts in September and December

From Morningstar: 2024-07-18 10:38:00

The European Central Bank (ECB) kept key interest rates unchanged at its meeting. President Christine Lagarde hinted at a likely 0.25 percentage point rate cut in September, with more cuts expected in December. Inflation data supports this outlook, with further rate cuts anticipated in 2024 based on analysts’ projections.

The decision was in line with expectations, leading to minimal market reactions. Economists did not foresee any additional policy changes this month after the rate cut in June. Despite stable macroeconomic data, the ECB is expected to continue gradual rate cuts to support the eurozone economy.

Evaluated statements indicated balanced inflation expectations, prompting forecasts of rate cuts in September. Economic risks, including trade tensions and global growth concerns, influenced the ECB’s decision-making. The bank’s data dependency highlights the uncertainty surrounding political and economic developments.

The ECB’s next meeting is crucial, aligning with market expectations for US Federal Reserve rate cuts. Interest rate adjustments in June hinted at future rate changes, while inflation forecasts and growth projections will be revised in September. Savers may face lower returns, while borrowers can benefit from more favorable lending conditions.



Read more at Morningstar: All Eyes on September as ECB Holds Interest Rates