The European Central Bank meeting is expected to be a crucial event, with expectations of a 25 basis point rate cut that could mark the second tightening this year. Investors will also be keeping an eye on global economic data.
He European Central Bank (ECB) The US is scheduled to hold its monetary policy meeting on September 12. Market participants expect the monetary body headed by Christine Lagarde to hold a will reduce the interest rate by 25 basis pointstaking it to 3.5%, marking the second rate cut this year.
The question that arises, however, is what might happen after this adjustment. Although there is no exact timeline, analysts suggest that recent economic data could point to further cuts by the end of 2024.
During the summer, eurozone macroeconomic indicators showed some signs of weakness. Despite a temporary boost from the Olympic Games, second-quarter GDP growth was below expectations and the labour market continues to show signs of slowing.
For some European analysts, the ECB has been waiting for certain specific conditions to implement a cut in September, such as a decline in wage growth, a slowdown in the dynamics of service prices and macroeconomic projections indicating that inflation forecasts will remain stable or lower than those of June.
ECB and the decision: the context
The bank had already cut rates in June, its first since 2019, making it one of the first major central banks to do so.
Markets are also pricing in an additional cut in December, which could add up to a total of three 25 basis point reductions in 2024.
lagarde ecb european
Reuters
This week, the ECB’s interest rate decision will be a key event for both European stock markets and the euro. On a global level, the publication of the monthly US Consumer Price Index (CPI) is also of great importance, as it will significantly influence overall sentiment.
After a gloomy week, several key economic data and events are set to shape market sentiment in the coming days. The ECB rate decision will be in focus, with wide expectations that the bank will implement its second rate cut of the year.
Additionally, the U.S. is expected to release August inflation figures, a crucial metric that the Federal Reserve closely follows when determining interest rate policy. Investors will also be paying attention to China’s consumer price index and U.K. GDP data for more insight into the economic outlook for both nations.
Source: Ambito
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