Wednesday, 10 April, 2024
Bloomberg Economics -ECB Spectrometer: A Guide to Doves and Hawks
Bloomberg Economics
ECB Spectrometer: A Guide to Doves and Hawks
1. The Bloomberg Economics European Central Bank Spectrometer
The European Central Bank isn’t ready to cut interest rates just yet. Bloomberg Economics expects the stars to align in June. Officials in northern European countries are staying cautious, concerned about elevated wage cost pressures. By contrast, colleagues from southern European nations are already pushing for the ECB to be ready to act. Our view is the ECB will cut by 25 basis points in June. We expect more cuts in September, October and December, leaving the deposit rate at 3% by year end.
EUROPEAN CENTRAL BANK
- SpectrometerNEW
- ECB OutlookNEW
- DovesNEW
- Neutral to HawkishNEW
- HawksNEW
Spectrometer
2. ECB Spectrometer Points to April Pause Before June Rate Cut
Our ECB Spectrometer indicates the Governing Council will keep interest rates on hold in April. Bloomberg Economics expects data to unlock the first interest rate cut in June. That view has been widely endorsed by even some of the most hawkish members. For example, Bundesbank President Joachim Nagel has said the probability is the first cut comes before the summer break and that a move in June has a higher likelihood than one in April.
BE has ranked all 26 members of the Governing Council along a hawkish-dovish axis based on recent comments. We also take account of differing degrees of influence among members using three yardsticks. These include the number of mentions each member has received, the size of the economy the 20 members represent and our own value judgment. The six executive board members have more weight.
ECB to Cut Rates But Not Just Yet
