Views on how much the central bank will cut policy rates overall this year vary.
European the central bank (EKP) will start cutting interest rates in June, according to the vast majority of economists in a Reuters poll.
77 economists 25–28 answered the survey. March. 68 of them estimate that the central bank will keep its key interest rate unchanged in April, but start cutting it in June.
The next interest rate meetings of the Council, which decides on monetary policy, are on April 11 and June 6.
Interest rate cuts are starting to become relevant, as the increase in consumer prices, i.e. inflation, has slowed down significantly. Inflation was 2.6 percent in February, compared to 8.5 percent a year earlier.
Key ones the reasons for the slowdown in inflation are the significant tightening of monetary policy and the easing of the energy crisis and international supply disruptions. According to the central bank’s price stability objective, inflation must be two percent in the medium term.
Interest rate cuts in June are also supported by the fact that the central bank will then have new data on the development of wages at the beginning of the year. The wage increases are especially reflected in the prices of services, which went up by 4.0 percent in February.
Financial markets expect the central bank to lower its key interest rates by 0.25 percentage points in June. Since autumn, the commercial banks’ deposit rate has been 4.00 percent, and the rate for basic financing operations has been 4.25 percent.
Economists’ views on how much the central bank will lower key interest rates this year, on the other hand, vary. A little more than half, or 39 economists, estimate that the central bank will cut key interest rates by a total of 1.00 percentage points this year.
Just under half believe that interest rate cuts will be 0.75 percentage points or less.