In the last few hours the belief has grown that i Interest rate cuts will continue in the Eurozonealthough the strength of the US economy and the choices of the new president Donald Trump may push the US Federal Reserve to remain more cautious. Several central bankers who are part of the Governing Council of the European Central Bank (ECB) have in fact suggested a new cut in the cost of money. He therefore appears at the meeting on 30 January 2025 a rate cut of 25 basis points is now expected.
Christine Lagarde
“There direction is very clear“, said the president of the ECB Christine Lagarde on CNBC in Davos, with the pace “going to depend on the data, but a gradual movement is definitely something that comes to mind right now.” However, Lagarde seems to lean towards not proceeding too quickly, also to monitor the impact of the weak euro: “There will be interesting phenomena that we will monitor. The exchange rate, for example, will be of interest and could have consequences.”
Francois Villeroy de Galhau
Francois Villeroy de Galhauthe French central bank’s top bank, said the ECB’s 3% deposit rate could fall quickly as the bank was confident of bringing inflation back to its 2% target. “Expect our benchmark rate to be around 2% by this summer it’s a plausible scenario,” he told the World Economic Forum in Davos, arguing that 2% was his estimate for the neutral rate, which neither slows nor stimulates growth.
Klaas Knot
“I am quite satisfied with market expectations for the next two meetings and, apart from that, I think it is too early to comment,” the Dutch governor said Klaas Knot on Bloomberg TV. “The data is encouraging, it confirms the general picture that we will return to the target in the rest of the year and hopefully the economy will also finally recover a little,” he added.
Olli Rehn
“We are now confident that inflation will stabilize at the expected target and that the monetary policy will cease to be restrictive in the near future“, said the head of the Finnish central bank Olli Rehn in a speech in Oulu.
Trend already emerged
All this confirms that, unlike what happened in December, preparations for next week’s ECB meeting have been relatively calm and there were no controversial opinions on the next moves.
“We remember that i minutes of the ECB meeting in December had already highlighted a growing orientation towards easing by the Eurotower, based on doubts about growth forecasts and the growing risk of subdued inflation – said Carsten Brzeski, Global Head of Macro at ENG – With little new hard data published since then, the ECB currently faces a “light” version of stagflation: continued sluggishness of the economy and acceleration of inflation. However, the ECB seems to be looking beyond this temporary inflationary push and even the hawks seem to be moving towards more accommodative positions.”