Respondents Do Not Expect ECB Rate Cuts in July // ZEW Policy Brief on ECB Interest Rate Expectations from Financial Market Experts

ZEW Policy Brief on ECB Interest Rate Expectations from Financial Market Experts

After the European Central Bank (ECB) cut interest rates in June 2024, the financial experts surveyed by ZEW Mannheim do not expect the ECB to lower interest rates further in July. Instead, they anticipate the next rate cut to take place in September 2024. In general, the majority of participants expect additional rate cuts at every second ECB meeting over the next 12 months. However, the experts' assessments of future interest rate developments vary widely, indicating a high degree of uncertainty about the further monetary policy path. These are the results of special questions included in the ZEW Financial Market Survey from June 2024 with answers from 103 experts, which researchers from ZEW Mannheim and Heidelberg University analysed in a ZEW policy brief.

"Most respondents expect the ECB to cut rates in September and December 2024. However, they do not foresee a linear downward movement of interest rates but rather phases during which the ECB Governing Council will keep rates at the level of previous meetings, in line with ECB President Christine Lagarde's statements on a future data-driven approach to monetary policy adjustments," explains Dr. Alexander Glas, project leader of the ZEW Financial Market Survey in ZEW's "Pensions and Sustainable Financial Markets" Unit. "At the same time, we see that respondents have very different assessments of the ECB's future interest rate path - there is no clear majority opinion on how exactly the ECB will adjust rates in the next 12 months. However, the experts agree that the key interest rate will settle between 3.0 and 3.75 per cent in a year's time, most likely at 3.25 per cent."