(Telestock) – Second rate cut ready with which the ECB is easing the monetary tightening that began during the energy crisis 2022-2023.
But if the deposit rate – which has been the reference for the cost of money for years – will probably fall by 25 basis points, with today’s meeting the new regime with which the ECB directs monetary policy comes into force. With the result that the rate on refinancing to banks will probably fall by 60 basis points: 25 of which will be a reduction in the cost of money, and 35 due to an expected technical adjustment of the new ‘operational framework’ announced by the ECB in March.
After the 25 basis point cut decided in June, therefore, the ECB is ready to cut by the same amount, then again in December and on a quarterly basis during 2025. Barring any negative inflation surprises, which could open up the possibility of more frequent cuts: on this point the words of Lagarde.
“We believe the most likely scenario for today is a cut in interest rates (25 basis points for the deposit rate and 60 basis points for the one-week refinancing rate),” he explains. Philip Diodovich, Senior Market Strategist at IG Italia ahead of today’s ECB meeting. “ECB Governor Christine Lagarde will, in our view, remain very tight-lipped, trying not to reveal anything about the discussions within the Governing Council to avoid destabilizing the markets. It will be reiterated that the ECB’s approach will continue to be dependent on the performance of macroeconomic data and only new indications of a strong slowdown in consumer price growth could convince central bankers to cut rates again in September. We maintain our outlook on just one interest rate cut in the coming two meetings (October and December) because we assess that inflation may remain at high levels for longer than expected”.