{"id":10198,"date":"2024-06-11T15:13:12","date_gmt":"2024-06-11T15:13:12","guid":{"rendered":"https:\/\/tst.finantia.es\/blog\/2024\/06\/11\/analysis-of-the-ecb-meeting-of-6-june-2024-3\/"},"modified":"2026-07-02T11:34:58","modified_gmt":"2026-07-02T11:34:58","slug":"analysis-of-the-ecb-meeting-of-6-june-2024-3","status":"publish","type":"post","link":"https:\/\/www.finantia.es\/en\/2024\/06\/11\/analysis-of-the-ecb-meeting-of-6-june-2024-3\/","title":{"rendered":"Analysis of the ECB Meeting of 6 June 2024"},"content":{"rendered":"

Last week, as expected, the ECB cut the key interest rate by 25 basis points, ending the tightening cycle and leaving the deposit facility rate at 3.75%, below the record high of 4% reached in September last year.<\/p>\n

Lagarde mentioned at the post-meeting press conference that this decision, which followed the May inflation reading that showed an acceleration, was supported by all Governors except one, which was to be expected, as in recent months a rate cut appeared to be the consensus within the Central Bank\u2019s governing body.<\/p>\n

The Bank also released its highly anticipated revised economic projections. Compared with the March projections, the ECB now expects the region to grow at a faster pace this year (0.9% per annum<\/span> vs. 0.6% previously) and at a slightly slower pace next year (1.4% per annum<\/span> vs. 1.5% previously), which is in line with the latest PMI readings, showing that business activity in the region is accelerating again (driven mainly by the strong services sector).<\/p>\n

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\"Table<\/p>\n

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Both core and headline inflation for 2024 were revised up by 0.2 percentage points, and the ECB now expects core inflation to reach the 2% target in Q2 2026 rather than Q3 2025. While the revised inflation projections may raise the question of whether the ECB would deliver further rate cuts this year, Lagarde\u2019s post-meeting remarks had a dovish tone, suggesting that more may be in the pipeline. In fact, Lagarde stressed that the path towards the 2% inflation target will be bumpy and that the \u201cbumps along the way\u201d could surprise \u201cboth in their existence and in their magnitude,\u201d implying that ECB staff already expect some economic data, particularly on wages and inflation, to come in above initial expectations.<\/p>\n

Although the ECB President did not provide any guidance on the timing of future rate cuts, she noted that the current level of interest rates (3.75%) is still \u201cfar\u201d from what they consider to be the neutral rate, the rate that allows the economy to continue growing at full employment while keeping inflation stable at 2%.<\/p>\n

In summary, the overall message from this meeting was that the ECB does not appear to be particularly concerned about the \u201cbumps along the way,\u201d meaning some worse-than-expected outcomes, as long as inflation is seen reaching its target, which they clearly still do. That said, investors are now pricing in the next rate cut as likely to take place at the September meeting.<\/p>\n

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This communication has been produced by Banco Finantia for informational purposes only and does not constitute investment advice. In preparing this communication, no consideration was given to investors\u2019 investment goals, financial situations, or specific needs. Accordingly, the information has not been tailored to any actual or potential investor, nor have any specific circumstances relating to such investors been taken into account. <\/small>
\nThe information disclosed is based on market conditions prevailing at the time, as well as on information obtained from recognised third-party entities, which are public sources. Banco Finantia has not independently verified the data or information provided by those entities. As the recipient of this communication is aware of this situation, Banco Finantia cannot, under any circumstances, be held liable for any errors, omissions, or inaccuracies contained in this document or arising from the use of such information. Banco Finantia accepts no responsibility for any direct or indirect losses or damages that may be incurred by those who carry out transactions based on the information provided. <\/small>
\nBanco Finantia\u2019s investment policy, whether acting on its own account or on behalf of its clients, is entirely independent of the content of this communication. The Banco Finantia Group may hold positions in, or trade, the securities or financial instruments referred to herein, before or after the issuance of this communication, and may also provide, or seek to provide, banking services to the issuers of such securities or financial instruments. <\/small>
\nBanco Finantia\u2019s competent supervisory authority is the CMVM, with which it is registered under number 109.<\/small><\/p>\n","protected":false},"excerpt":{"rendered":"

Last week, as expected, the ECB cut the key interest rate by 25 basis points, ending the tightening cycle and leaving the deposit facility rate at 3.75%, below the record high of 4% reached in September last year. Lagarde mentioned at the post-meeting press conference that this decision, which followed the May inflation reading that […]<\/p>\n","protected":false},"author":10,"featured_media":7031,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[93],"tags":[100,102],"class_list":["post-10198","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles","tag-corporate-banking","tag-ecb"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.finantia.es\/en\/wp-json\/wp\/v2\/posts\/10198","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.finantia.es\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.finantia.es\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.finantia.es\/en\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/www.finantia.es\/en\/wp-json\/wp\/v2\/comments?post=10198"}],"version-history":[{"count":1,"href":"https:\/\/www.finantia.es\/en\/wp-json\/wp\/v2\/posts\/10198\/revisions"}],"predecessor-version":[{"id":10376,"href":"https:\/\/www.finantia.es\/en\/wp-json\/wp\/v2\/posts\/10198\/revisions\/10376"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.finantia.es\/en\/wp-json\/wp\/v2\/media\/7031"}],"wp:attachment":[{"href":"https:\/\/www.finantia.es\/en\/wp-json\/wp\/v2\/media?parent=10198"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.finantia.es\/en\/wp-json\/wp\/v2\/categories?post=10198"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.finantia.es\/en\/wp-json\/wp\/v2\/tags?post=10198"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}