Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

UBS anticipates ECB rate cut to 3.75% in June, future cuts unclear

Published 05/22/2024, 07:22 PM

UBS projected that the European Central Bank (ECB) is set to reduce its policy rates at the next meeting on June 6, following indications from the ECB's meeting on April 11 and comments from Governing Council members.

The anticipated cut would bring rates down by 25 basis points to 3.75%. However, the trajectory of policy rates beyond June remains uncertain, with the ECB underscoring its reliance on economic data to guide future decisions.

According to UBS's baseline scenario, after the initial cut in June, the ECB may embark on a prolonged and incremental sequence of rate reductions. These would consist of 25 basis point cuts each quarter, leading to a total decrease of 75 basis points in 2024 and an additional 100 basis points in 2025.

This gradual approach would result in the deposit facility rate reaching 3.25% by the end of 2024 and 2.25% by the end of 2025.

The ECB's cautious stance reflects a commitment to data-dependent policymaking, suggesting that any subsequent rate cuts will be closely tied to incoming economic indicators. The central bank's approach indicates an effort to balance the need for economic stimulus with the risks of inflation and other financial stability concerns.

This forecast from UBS comes amid a broader context of global central banks grappling with the challenges of inflation and economic growth. The ECB's potential rate cut in June would align with efforts to support economic activity in the Eurozone while being mindful of the evolving economic landscape.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.