The European Central Bank cut euro zone interest rates by 25 basis points. ECB President Christine Lagarde commented on the move at a press conference where she also discussed euro zone inflation and economic forecasts.
- Eurozone inflation has fallen significantly, but the bank expects CPI to rise slightly in 2024 and 2025.
- The ECB is determined to keep policy restrictive to achieve its 2% inflation target.
- The ECB decided to cut interest rates, and inflation has fallen sharply since September.
- Inflationary pressures are evident and are primarily related to high wages.
- Inflation will remain above target this year and next
- The ECB decided to raise its inflation forecasts for this year and next.
- ECB not committing to any interest rate path
- After a long period of stagnation, growth in the euro area has recovered, albeit at a very slow level.
- Industry is showing signs of stabilization. The economy will continue to recover.
- Rising wages are the reason for the recent rebound in inflation. The economy is definitely improving.
- Wage growth will slow and average below current levels this fiscal year
- Inflation will likely return to roughly current levels by 2024.
- Long-term inflation expectations are very low and under control
- A weaker global economy and tensions between major economies could hinder the eurozone economic recovery
- In the short term, food prices could rise due to higher transport costs and the climate crisis, but inflation could also veer to the downside if the economy unexpectedly weakens or interest rates rise, dampening consumer confidence and spending.
- Inflation will remain at current levels this year before declining in the second half of 2025
- Strong inflation forecasts for the fourth quarter of 2024 underpinned the rate cut decision
Q&A session
- Confidence in inflation trends has grown in recent months
- The cut is linked to certainty about the path of inflation
- The ECB relies on data: decisions are taken at each meeting.
- More data is needed to confirm the underlying disinflationary trajectory.
- Inflation is set to remain volatile in the coming months.
- The current situation is significantly more restrictive than it was in September.
- Wages are key in assessing future inflation
- Inflation outlook, core inflation and monetary policy transmission – key criteria for interest rate decisions
EURUSD (M5 intervals)
Source: xStation5
