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ECB Governing Council Vujcic: Rate cut unlikely before summer

2024-01-10

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Boris Vujcic, a member of the European Central Bank (ECB) Governing Council and governor of the Central Bank of Croatia (HRV), said the ECB is unlikely to reduce borrowing costs before the summer.

Since September last year, the market has firmly believed that the European Central Bank will switch to interest rate cuts in the first half of this year. Although European officials have repeatedly tried to suppress speculation about interest rate cuts, they have failed to do so. Markets have recently tempered their bets on rate cuts to some extent, but still expect the European Central Bank to cut interest rates by 25 basis points in the spring.

Vujcic said in an interview on Monday that although inflation will continue to gradually ease, policymakers want to ensure that inflation slows down and will wait for Euro Area (EARN) labor market data.

"We are not talking about a rate cut now and there probably won't be a rate cut before the summer," he said.

The deteriorating economic outlook may strengthen market expectations for interest rate cuts, but Vujcic expressed confidence in the European economy that he believes the euro zone can avoid an economic recession.

Vujčić said: “It looks like Croatia will avoid recession, and probably the same for the eurozone. The economy will cool modestly, but not recession, and will achieve our interest rate-cutting inflation target.”

After the release of the latest inflation data, the market has become more cautious in betting on the extent of the European Central Bank's interest rate cuts. It is currently expected that a total of 145 basis points will be cut in 2024, while the previous figure was close to 175 basis points.

The above information is provided by special analysts and is for reference only. CM Trade does not guarantee the accuracy, timeliness and completeness of the information content, so you should not place too much reliance on the information provided. CM Trade is not a company that provides financial advice, and only provides services of the nature of execution of orders. Readers are advised to seek relevant investment advice on their own. Please see our full disclaimer.

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ECB Governing Council Vujcic: Rate cut unlikely before summer

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