Research Briefing | Jun 6, 2024

ECB embarks on rate cutting path, but at an uncertain pace

There were few surprises at the June ECB meeting. The council delivered the widely expected first rate cut, having judged that the inflation outlook had sufficiently improved to begin easing policy. But the policy statement and president Lagarde’s press conference retained a hawkish bias, with the council sticking to its data dependent, meeting by meeting approach.

What you will learn:

  • New staff projections added to the hawkish tilt with the headline and core inflation forecasts for this year and next revised up more than expected reaching the 2% target only later in 2025. We remain more confident of the disinflationary trend than the ECB, but our revised forecasts now see inflation undershooting 2% only early next year rather than already in H2 this year.
  • Stickiness in wages and domestic inflation remain a key worry point. Leading indicators point to good news accumulating on that front, which we think will facilitate further rate cuts later this year. But we now think that progress won’t be fast enough to reduce the ECB’s hawkish tilt sufficiently. Therefore, we expect only two more rate cuts this year, in September and December.
Back to Resource Hub

Click here to subscribe to our asset management newsletter and get reports delivered directly to your mailbox

Strategy Key Themes 2025: Opportunities amid heightened uncertainty

We think the environment of strong US demand coupled with still ample global liquidity, should be positive for US risk assets.
Read more: Strategy Key Themes 2025: Opportunities amid heightened uncertainty
Gold bars on dark background

Gold rush will lose steam, but still a good strategic bet

We close out our tactical long position on gold that we re-opened in July 2024. Still, we remain bullish on a strategic horizon.
Read more: Gold rush will lose steam, but still a good strategic bet

What to Expect for Equities When the Fed Cuts Interest Rates

The onset of the Federal Reserve's easing cycle is typically positive for equities so long as the US economy avoids a recession.
Read more: What to Expect for Equities When the Fed Cuts Interest Rates

Economics for Asset Managers

Read more: Economics for Asset Managers