The European Central Bank (ECB) today cut interest rates for the third time this year, citing improved inflation control and a deteriorating economic outlook for the euro area.
The euro initially appreciated after the interest rate decision, but then fell after the release of positive economic data from the United States.
The euro was last trading at $1.0836, down 0.25% from $1.0863 before the ECB’s announcement.
Europe’s STOXX 600 index rose 0.8%, and the benchmark 10-year German bond yield rose 3 basis points to 2.21%, moving slightly away from bond prices.
Financial sector experts gave their opinions on the ECB’s decision. Commenting on the slowdown in European growth, Robert Farago, head of strategic asset allocation at Hargreaves Lansdown, said he expected the ECB to continue cutting interest rates.
Governor Farago emphasized the importance of the economic development of the United States over the economic development of Europe, as determining interest rates would be difficult given the robust economy of the United States.
Dean Turner, chief eurozone economist at UBS Global Wealth Management in London, expects the ECB to continue cutting interest rates until June next year, pushing deposit rates to 2%.
Turner also expects small and medium-sized businesses in the eurozone to benefit from the ECB’s interest rate cuts and expects the euro to perform well against the dollar in the coming months.
Roberto Mialich, foreign exchange strategist at UniCredit in Milan, acknowledged that the ECB’s actions were in line with expectations and depended on economic data. Seema Shah, chief global strategist at Principal Asset Management in London, argued for the need for continuous interest rate cuts by the ECB given the difficult situation in the eurozone economy.
Carsten Brzeski, global head of macro at ING in Frankfurt, said the ECB’s decision to cut rates again quickly showed growing concerns about the eurozone’s growth prospects. Matthew Landon, global market strategist at JPMorgan Private Bank in London, expects interest rate cuts to be phased in through 2025, putting pressure on European assets, particularly the euro. are.
Mark Wall, chief European economist at Deutsche Bank in London, said the rate cut was an important step that signaled a faster normalization of monetary policy. Arne Pettimezas, research director at AFS Group in Amsterdam, expressed surprise that the ECB did not concede to an easing cycle despite the recent pattern of rate cuts.
Finally, Marcel Aleksandrovich, an economist at Saltmarsh Economics in London, said this is the first time since 2011 that the ECB has cut interest rates in consecutive meetings, and he expects another cut in December. He emphasized that there is. The ECB is expected to continue adjusting interest rates towards neutral levels as inflationary pressures ease.
Reuters contributed to this article.
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