This week’s economic agenda is highlighted by the European Central Bank’s (ECB) penultimate rate meeting of the year. Market consensus expects the monetary authority to continue the new rate cut cycle that began in June, when it cut interest rates by a quarter-point to 4.25%.
“The good development of inflation, combined with the recent weakness in the price of crude oil and the strength of the euro, should reassure the ECB in continuing to ease its monetary policy,” says Luis Merino, head of fixed income, mixed and investment selection at Santalucía AM Fund. And Ulrike Kastens, economist for Europe at DWS, is in the same situation. which underlines in this sense that “anything other than a rate cut in September would be a surprise”.
From Ebury, the global fintech specialising in international payments and currency exchange, they believe that a less aggressive decision from the ECB than that expected by the markets at next week’s meeting could slow the decline Euribor or even push it up. And markets are anticipating three rate cuts from the ECB over the rest of the year.
“We expect the ECB to cut interest rates more gradually in the coming months than markets currently anticipate. In particular, we expect the central bank to cut rates two more times this year (in September and December). We believe that if the ECB confirms this view at its next meeting, the decline in Euribor could slow down and the indicator could even increase slightly in the short term,” the fintech analysts point out in their weekly Euribor analysis. They believe that while there is a lot of uncertainty about where the indicator will end up at the end of the year, “We maintain our forecast that Euribor will be around 3% – 3.5% at the end of 2024”.
In addition to the central bank’s monetary policy meeting, this week investors and analysts will also be watching CPI data from Spain, China, Germany and, most importantly, the United States. And while the market is already focused on employment figures as a catalyst for the Fed’s decisions, experts are not yet turning their eyes away from price developments in the country.
