A wide range of economists predict that the European Central Bank (ECB) will continue to cut interest rates in the upcoming months as a dovish policy approach takes hold amid sluggish GDP growth and escalating tensions over global trade.
Experts agree that the ECB will ease by an additional 75 basis points over the course of the next three meetings, bringing the deposit rate down to as low as 1.5% by September.
The European Central Bank lowered its deposit facility rate to 2.25% on Thursday, the lowest level since January 2023, marking the sixth decrease in less than a year. The cut was 25 basis points. Although the action was generally anticipated, predictions of further easing have been sparked by the Governing Council’s statement and the press conference held after the meeting.
The news conference and message had a dovish tone. Senior eurozone economist Jan-Paul van de Kerke of ABN Amro stated. The addition of adverse threats like “trade tensions,” deteriorating financial market sentiment,” and “geopolitical tensions,” he continued, demonstrated that policymakers are becoming more and more biassed in favour of economic support.
ECB President Christine Lagarde stated that some Governing Council members had been leaning towards maintaining rates constant before to the most recent surge in trade tensions, even though she reaffirmed that decisions are still data-dependent and will be made meeting by meeting.
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