Why an ECB rate cut next week is less obvious than markets think

Oct. 7, 2024 - ING Think

After another batch of weak sentiment indicators and headline inflation below 2% for the first time in more than three years, financial markets’ verdict was clear: the ECB has to and will cut rates again at next week’s meeting. We, however, think that the decision to cut rates will be much more controversial than markets currently think.

The December meeting was clearly the preferred option for the next rate cut as it will be a meeting with updated macro projections. In short, after the September meeting the stage was set for a quarterly pace for rate cuts.

Are one batch of weak sentiment indicators and dropping headline inflation now really reason enough to overhaul the September strategy?..