PT Solid Gold Berjangka | ECB Holds Rates Steady With More Data Needed for Next Cut
ECB Ekonomi Eropa European Central Bank PT SGB Solid Group SG Berjangka Solid Gold Berjangka
Solid Gold Berjangka | The European Central Bank (ECB) left interest rates unchanged after last month’s landmark rate cut, but made little indication of its plans as investors and economists bet on the possibility of another rate cut in September.
On Thursday, the deposit rate was left unchanged at 3.75%, as all 55 economists in the Bloomberg survey had expected, and the ECB reiterated that borrowing costs would remain “as long as necessary” and “sufficiently restrictive” to ensure inflation returns to 2%.The ECB said in a statement that “incoming information broadly supports the Council’s previous assessment of the medium-term inflation outlook. At the same time, “domestic price pressures remain high, services inflation is rising, and headline inflation is likely to remain above target into next year.
The ECB again reiterated its “data-dependent, meeting-by-meeting approach,” but said it “does not commit in advance to a specific interest rate path.”The euro traded 0.1% lower at $1.093. Financial markets continue to believe that two more rate cuts will take place in 2024.
The ECB is assessing whether inflation in the eurozone has cooled sufficiently to allow for further monetary easing. The underlying pressure remained firm, although it fell slightly from 2.6% to 2.5% last month, and the rate of increase in the cost of services again exceeded 4%.
President Christine Lagarde said officials need more solid data and that the European labor market has shown surprising resilience during two years of economic stagnation.
Lagarde is scheduled to hold a press conference in Frankfurt at 2:45 p.m. However, Lagarde may refrain from explicitly pointing out that policymakers were seen to have painted themselves into a corner by strongly hinting in advance that monetary easing measures would be implemented in June.
This time around, policymakers are more cautious, although several have tentatively endorsed one or two more cuts in recent weeks. The expectation is that they will be ready to make the first cut at the next policy meeting in two months.
By then, new economic forecasts, two more inflation numbers, and figures on three factors (wage growth, corporate profitability, and productivity) will be released to support the view that price inflation will fall back to target levels in late 2025.
There could also be more clarity on the Federal Reserve’s intentions, with the market expecting the first reduction in U.S. borrowing costs the week after the ECB’s September meeting.
The European Central Bank (ECB) is taking a cautious approach to lifting the string of rate hikes it has implemented to curb price increases, which is in line with the recommendations of leading global institutions.
The International Monetary Fund (IMF) warned Tuesday that inflation in many major economies is receding more slowly than expected, largely due to high service prices.
The Bank for International Settlements said in June that central banks should not cut borrowing costs too sharply to avoid another rise in price inflation.
Source: Bloomberg