ECB - European Central Bank

ECB - European Central Bank

March 30th 2024


ECB Minutes (Thu):

As expected the ECB opted to stand pat on rates as policymakers continue to monitor progress towards the Bank's inflation mandate. Furthermore, guidance on rates was reaffirmed as stating that "rates will be set at sufficiently restrictive levels for as long as necessary". This served as a disappointment to some who had been hoping that policymakers would insert some language suggesting that discussions on the policy normalisation process had begun. However, the accompanying macro projections did offer something to the doves with the 2024 and 2025 inflation forecasts lowered, leaving the latter matching the Bank's 2% target. From a growth perspective, 2024 was cut to 0.6% from 0.8% with next year's forecast held at 1.5%. At the follow-up press conference, Lagarde noted that the Bank is not yet "sufficiently confident" when it comes to meeting its target. In terms of the policy path beyond the March meeting, Lagarde stated the Bank will know a little more in April but a lot more in June. When it comes to the discussions held during the meeting, Lagarde stated that the policy decision was unanimous, there was not a discussion over rate cuts but the GC has begun discussing dialling back its restrictive stance with the view that the Bank will not wait until the 2% inflation target is reached in order to cut rates. Subsequently, source reporting via Reuters noted that policymakers overwhelmingly favour June for the first rate cut; something which has been reaffirmed via subsequent rhetoric from Governing Council members. As such, any mention of this in the account of the meeting will not be new information for the market. That being said, reporting from Reuters also noted that some policymakers floated the idea of a second cut in July to win over a small group still pushing for an April start; any discussion on this will be of note for the market.