MNI ECB Preview - January 2024: No Change For Now, But Policy Rate Cuts Looming
Jan-23 13:27By: Bruce Jeffery
No Change For Now, But Policy Rate Cuts Looming
- No changes are expected at this week’s ECB policy meeting.
- President Lagarde will likely use the press conference to push back against market expectations of policy rate cuts in the near-term, while also entertaining the possibility of easing policy later in the year.
- In other words, the overall message will be that the ECB is getting closer to easing policy, but it is not there yet.
- Having misjudged the surge in inflation over 2021-2022 and with uncertainty over the drivers of inflation post-Covid, the ECB will be particularly cautious of easing prematurely and repeating the 2011 policy misstep (when rates were raised prematurely).
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