Jin Shi data sorting: 10 investment banks look ahead to the European Central Bank Interest Rate resolution - based on July, looking ahead to September

GoldenOctober2024

2024-07-18 06:14:42

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Goldman Sachs: The European Central Bank (ECB) is expected to keep the Interest Rate unchanged and reiterate its reliance on data and a gradual approach to decision-making, without pre-committing to a specific Interest Rate path. Lagarde will acknowledge sticky inflation in the services sector but believe that inflation is still broadly on a downward trajectory, and the ECB may cut rates again in September. 2. Bank of America: The ECB is expected to keep the Interest Rate unchanged and maintain a neutral stance as there has been no significant new information since June to strengthen the belief in rate cuts. Our base forecast remains for the ECB to cut rates twice more this year, driven by lower-than-expected inflation. 3. Deutsche Bank: The ECB is expected to keep the Interest Rate unchanged, and Lagarde may open the door for a rate cut in September by hinting that data aligns with the ECB’s forecasts, even while reiterating the reliance on data. While a commitment to rate cuts is unlikely to be as explicit as before the June Interest Rate decision, the market should understand this. 4. Societe Generale: The ECB’s July meeting is expected to pave the way for a rate cut in September. Overall inflation in September and October will decrease closer to the target level, indicating that September may be a good time for rate cuts. The market pricing of a rate cut once per quarter by the ECB seems reasonable, with the final Interest Rate expected to be around 2.50%. 5. Morgan Stanley: It is widely expected that the ECB will keep the Interest Rate unchanged. We believe that even if the ECB maintains similar wording to June, it can still leave the possibility of a rate cut in September without becoming more dovish to reinforce rate cut expectations. We do not expect the July meeting to have a significant impact on the euro. 6. J.P. Morgan: The ECB is expected to keep the Interest Rate unchanged. Lagarde’s press conference should follow the future Interest Rate path and the development of French political affairs. The data since June has not significantly changed the ECB’s assessment of the macroeconomic outlook, and the ECB may reiterate its reliance on data and continue to anchor Interest Rate expectations. 7. Deutsche Bank: The ECB may avoid giving explicit guidance and emphasize that it has no predetermined Interest Rate, but as inflation approaches the target, its restrictive monetary policy stance will further ease. However, the ECB does not want to commit to when and how much to cut rates; it wants to be data-driven. 8. Nordea Bank: The ECB is expected to keep the Interest Rate unchanged and wait for confirmation that inflation is continuously approaching the target. Lagarde is expected to emphasize again that the ECB will rely on data and follow a gradual approach to decision-making, without pre-committing to a specific Interest Rate path. The ECB will wait until September to cut rates again. 9. ING Bank: The ECB is expected to keep the Interest Rate unchanged and avoid issuing any new forward guidance to disrupt market pricing. The ECB’s communication will be less is more, and the impact on Interest Rate and forex should be limited. Considering the divergence at the June meeting and the upside risks to inflation, a rate cut in September is not set in stone. 10. Rabobank: The door to a rate cut in July is firmly closed, and the data suggests that the ECB should exercise further caution and not cut rates consecutively in July. The ECB’s forecasts may be too mild, so it will not prevent them from resuming rate cuts in September, but there is an upside risk to our forecast for future deposit Interest Rates.

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