ECB not yet sufficiently confident to cut, all eyes on wage data

In Short

GC unsurprisingly decided not to act today: At today’s meeting the GC unsurprisingly decided again to leave key rates unchanged, the deposit rate at 4.00% and the repo rate at 4.50%. It continues with APP non-reinvestments and sticks to the pervious announcements that it “intends to reduce the PEPP portfolio by €7.5 billion per month on average” over the second half of 2024 and to fully stop reinvestments at the end of 2024.


  • At today’s meeting, the ECB’s Governing Council (GC) left its key rates unchanged, in line with ex-pectations. 
  • Most importantly, the GC noted that “inflation has declined further”. In the updated macro projec-tions the expected inflation path has shifted down and annual headline as well as core inflation are now expected to be in line with target by 2026 while high domestic price pressure “in part owing to strong growth in wages” persists. 
  • Altogether, the GC’s confidence in the decline of inflation increased but it is not yet sufficiently high to act. Rate cuts were not discussed today while awaiting pivotal wage data over the second quarter.
  • We stick to our call of a first 25 bps rate cut by June and continue to see cumulative cuts of 100 bps in 2024. Markets left the expected path of key rate cuts almost unchanged and assessed to-day’s ECB meeting as mildly dovish.  

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ECB not yet sufficiently confident to cut, all eyes on wage data

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