Limited scope for ECB interest rate cuts – Commerzbank

Eren Sengezer FXStreet

Dr. Marco Wagner, Senior Economist at Commerzbank, notes that there is virtually no doubt that the European Central Bank (ECB) will lower key interest rates in June but argues that the ECB will hardly be able to lower the deposit rate below 3%.

ECB's room for maneuver for further interest rate cuts will be limited

"In the short term, the ECB's picture is likely to be quite accurate, namely that inflation should continue to fall over the remainder of 2024, albeit with fluctuations. However, there is a huge underlying structural inflationary pressure that will drive inflation in the coming years."

"The central bankers will therefore only have a window of opportunity for interest rate cuts in the coming months, which we believe will close in the spring of next year. The ECB's room for maneuver for further interest rate cuts will be limited as high inflationary pressure then becomes increasingly visible."

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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