From Morningstar: 2024-04-30 07:47:00

In April, eurozone inflation held steady at 2.4%, meeting economists’ expectations. But core inflation dropped to 2.7%, indicating a possible interest rate cut at the next ECB meeting in June. Major contributors were services, food, alcohol, tobacco, non-energy industrial goods, and energy, according to Eurostat estimates.

Eurozone GDP grew by 0.4% in the first quarter of 2024, surpassing expectations. This growth contrasts with the US economy’s concerns of inflation resurgence and overheating. The ECB expects a full-year growth rate of 0.6%, with economists predicting an interest rate cut in June following the positive GDP data.

The European Central Bank is expected to cut interest rates on June 6, according to ECB officials and economists alike. ECB vice-president Luis de Guindos stated in an interview that the June cut is imminent due to concerns of weak recoveries and monetary policy constraints in European economies.

A divergence in monetary policy between Europe and the US is evident, with the Federal Reserve expected to hold interest rates longer amidst stubborn inflation data. Investors anticipate a stronger dollar against the euro, impacting financial markets. The US dollar’s strength reflects market sentiment towards the Fed, with potential interest rate cuts on the horizon.



Read more at Morningstar: ECB Rate Cut On Track as Core Inflation Falls