Heels|Economists believe that the ECB will have to speed up its interest rate cuts next year, according to a Bloomberg survey. In addition to the economic slowdown, the government crises in France and Germany cause concern, among others.
European the central bank (EKP) will probably have to lower its key interest rates next year at a faster pace than expected. This is what economists predict, according to an economist survey published by the news agency Bloomberg on Friday.
According to economists, the reason for this is the current weakness of the euro area economy and the new threats to it.
The risks of the economy have increased after the fall of the German and French governments and the future president of the United States Donald Trump’s with the threatened import duties.
The fresh data published on Friday also dashed hopes for an easing of the situation in German industry, as German industrial production contracted in October contrary to expectations.
Bloomberg’s according to the survey, economists predict that the key policy rate, i.e. the deposit rate, will fall to 2.0 percent already next June.
Back in early October, economists predicted that the key interest rate would not drop to this level until the end of 2025.
According to a Bloomberg survey, economists now believe that the ECB will have to lower its key interest rate at each rate meeting next year.
The ECB’s next interest rate meeting is next week, Thursday, December 12.
The majority of the economists who responded to the survey believe that at that time the ECB will lower its key interest rates by 0.25 percentage points. It would drop the ECB’s key policy rate, i.e. the deposit rate, to 3.0 percent. This would be the fourth rate cut this year.
However, some economists expect an interest rate cut of up to half a percentage point, when the outlook for the economy has darkened.
Although the big one-time drop did not receive widespread support in the survey, a clearly larger group has started to believe that the ECB will have to put its views into words in a slightly new way.
Until now, the ECB has said that it will keep its monetary policy and interest rates tight as long as necessary. Now a little more than half of the economists who responded to the survey believe that the ECB will have to reword this statement somewhat.
Also the CEO Christine Lagarden the tone of the speech at next week’s press conference may be more dovish than before, i.e. speaking in favor of loosening monetary policy, some economists predict.
The majority, or 65 percent, of the responding economists believe that at the end of next year the ECB’s key interest rates will be at a level that will revive the economy. As recently as October, only 38 percent of respondents held this opinion. At that time, the view of a neutral monetary policy at the end of next year received the most support.
Bloomberg’s economist survey was conducted between November and December.