The markets are waiting today at 3: 15 pm Egypt time for the decision of the European Central Bank, and the bank is expected to reduce interest rates by 25 basis points from 4.50% to 4.25%, and this reduction has been expected since last April's meeting, although the ECB has constantly stressed that decisions depend on data.
The interest rate cut is expected in June, but the forecast for the second half of the year is less clear.
If the short-term inflation profile does not change significantly, despite the negotiated wage hikes, this means that the ECB is confident that inflation levels have fallen, and that further cuts can be made in the second half of the year.
With inflation falling to around 2% by 2025, it will be difficult to justify such a restrictive policy in interest rates.
When can the European Central Bank move again ?
After the June meeting this month, the ECB will have four more meetings this year, each in July, September, October and December.
If inflation continues to decline in the third quarter of this year, I think this may lead to a one or two-time reduction before the end of the year.
We expect Lagarde to confirm during the press conference that the ECB is not influenced by the Federal Reserve and remains dependent only on Eurozone data.
