The European Central Bank won’t lower interest rates until September 2024, according to a new poll of economists – suggesting the message from policymakers that cuts won’t come soon is sinking in.
The result of the latest Bloomberg survey is a departure from the previous round, when respondents still saw borrowing costs being lowered in March. Another reduction is foreseen in October.
The survey chimes with comments from ECB officials who spoke on the sidelines of the International Monetary Fund’s annual meetings in Marrakesh in recent days. Governing Council member Martins Kazakhs said current economic projections are inconsistent with a cut in the first half of 2024, and “in the second half of the year, we’ll see.”
Slovenian central-bank chief Bostjan Vasle said rising bond yields are a sign that investors are also accepting that a “longer period of higher interest rates” will be needed to bring inflation back to the 2 per cent goal.
Analysts in the Bloomberg poll still see price gains moderating to 2.7 per cent next year and 2.1 per cent in 2025. Economic expansion is expected to be lower than previously, however. Growth will only pick up to 0.7 per cent next year after 0.5 per cent in 2023, the poll showed. – Bloomberg
