ECB meeting 11 April, towards a rate cut? Forecasts

The ECB meeting on Thursday 11 April is already under the spotlight: what to expect on interest rates and what will be the tone of Lagarde's press conference? With the first cut in the cost of money discounted in June, this spring meeting should serve above all to clarify the roadmap for the easing of the Eurotower's monetary policy, perhaps revealing whether June is really the month chosen to start the cuts and how many they will follow.
Inflation has slowed meanwhile, moving even closer to the ECB's 2% target in March, paving the way for the eurozone bank to lead the Federal Reserve and other big peers in starting an easing cycle.
Prudence, however, has so far prevailed in Frankfurt, especially when observing wage trends.
However, the ECB meeting should confirm that the first rate cut is coming.
What will Lagarde say and what is her orientation on the cost of money in 2024? All the forecasts for the ECB meeting on 11 April.
ECB meeting 11 April, rate cut forecasts Traders are betting that the ECB will almost certainly start cutting interest rates in June, but they just need the green light from the board members, which should arrive right at the meeting in Thursday.
“Markets are looking for confirmation that a cut is coming in June,” said Guy Miller, chief market strategist at insurance group Zurich.
In essence, it is estimated that the April meeting will not decide anything new, with yet another maintenance of interest rates at 4.5%.
The wait is instead for more precise indications for June.
read also ECB, rate cuts already in April? Many doubts, few certainties in Europe Frederik Ducrozet, head of macroeconomic research at Pictet Wealth Management, said the ECB wants to see data broadly in line with its expectations of making a cut, rather than needing improvements as suggested by the Fed “Even if there were some upside surprises in an indicator, I don't think that would stop them from cutting,” he said.
“Although this meeting could be considered an interim meeting and lead to a limited market reaction, we expect the ECB to maintain a clear commitment to a rate cut in June…,” commented Danske Bank's research team.
Policymakers on the board want further signs of slowing after negotiated wage growth fell to 4.47% in the fourth quarter from a record 4.69% in the previous quarter.
The ECB has identified wages as the most important factor in determining the first rate cut, so the first quarter data due in May is one of the main reasons why the bank will leave everything unchanged again on Thursday 11 April.
Key to the meeting's discussion will be how quickly inflation continues to fall towards – and possibly below – the 2% target.
Consumer prices rose 2.4% year-on-year in March, slightly less than economists expected, and are expected to decelerate further in the coming months.
“We think that for the ECB, inflation outcomes would have a greater impact on the likelihood of having consecutive cuts,” said Fabio Balboni, an economist at HSBC.
“Unless growth surprises significantly to the upside – which seems unlikely – the case for removing the restrictive part of the policy, as Lagarde said at the March meeting, would remain strong.” read also ECB can cut rates even with rising wages, the statement Lagarde's long-awaited press conference, what to expect? How explicit will Lagarde be in announcing the next rate cuts? This is the question that most interests investors regarding the ECB meeting on 11 April.
“We expect the ECB to include a phrase along the lines of 'intends to cut rates by 25 basis points in June, provided the disinflationary process continues',” the Danske Bank team said.
Investors will also be looking for any hints about the pace of the cutting cycle once it begins, although analysts at Danske Bank, for example, don't expect any guidance beyond that point on the pace of cuts or the final level of the tightening cycle.
ING summarized the topic of interest of this ECB meeting as follows: “Even without an actual intervention on rates, the meeting could provide some interesting insights into what the future of the ECB will be.
We will mainly look for two things: changes to the communication and some mention of the size of the first and subsequent rate cuts.”