ECB Cuts Rates12 Sep 2024 14:27
Unanimous decision! Rate on the ECB’s deposit facility cut from 3.75% to 3.5%!
A Tricky balancing act for ECB:
Growth could be hit if the lagging impact of tighter monetary policy is stronger than expected, Lagarde admits.
Although, if inflation falls faster than expected growth (and therefore inflation) could be higher.
Lagarde adds, projections for core inflation have been revised up slightly (presumably since ECB got ahead of the curve, by going first and that's now safeguarding against inflation running too low or even tipping into deflation).
Which poses some key questions... With USA set to imminently make a rate cut; they've solid economic performance on their side of the water however, are they now ahead or behind the curve? Should they have already made a cut? Could they go for a bumper 0.5% cut to catch up lost time? Or will a 0.25% cut prove plenty enough, considering their stronger economic performance.
As for UK... we've only one cut so far and it doesn't appear to have helped support the wider economy yet. What will BoE decide next week?