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中邮证券:欧央行降息 超预期上调24年和25年的通胀预期 未对未来利率路径作出任何承诺

China Post Securities: ECB cut interest rates, raising inflation expectations for 2024 and 2025 higher than expected, without making any commitment to future rate paths.

Zhitong Finance ·  Jun 12 11:04

ECB President Lagarde said that the decision to lower interest rates was supported by historical data, and the upward adjustment of inflation expectations was a judgement of the future, which are not contradictory.

Zhongtong Finance APP learned that China Post Securities released a research report and believed that the most unexpected thing in the ECB's interest rate cut statement was that the ECB raised its inflation expectations for 2024 and 2025. ECB President Lagarde said that the decision to lower interest rates was supported by historical data, and the upward adjustment of inflation expectations was a judgement of the future. The second is that the ECB did not make any commitments regarding the future interest rate path, but rather emphasized data dependence and case-by-case discussion. Looking ahead, the team expects the ECB to cut interest rates about two more times this year; the easing of interest rates will help release the monetary policy space of other countries, and also help boost global risk assets.

Following the Bank of Canada's announcement of a rate cut, the ECB also announced a 25 bps rate cut last night, lowering the refinancing rate, overnight deposit rate and overnight loan rate to 4.25%, 3.75%, 4.5%, respectively, as expected by the market.

However, in the statement, the ECB's attitude is more hawkish. The two most unexpected points are: firstly, compared with March, the ECB raised its inflation expectations for 2024 and 2025. Staff expect that overall inflation will be 2.5% in 2024 (2.3% previously), 2.2% in 2025 (2.0% previously), and 1.9% in 2026 (1.9% previously). For inflation excluding energy and food, staff predicted 2.8% in 2024 (2.6% previously), 2.2% in 2025 (2.1% previously), 2.0% in 2026 (2.0% previously). Economic growth is expected to recover to 0.9% in 2024 (0.6% previously), 1.4% in 2025 (1.5% previously) and 1.6% in 2026 (1.6% previously).

This was also questioned by reporters at the subsequent press conference: Why cut interest rates while raising inflation expectations? ECB President Lagarde said "lowering interest rates is because past inflation data has brought confidence. In October 2022, the peak of inflation growth rate reached 10.6%, in September 2023, it dropped to 5.2%, and now it is 2.6%. The ECB suspended rate hikes in September and started to cut interest rates at this meeting. Every time the direction is changed after reassessment, it should be when the inflation growth rate is halved. However, looking ahead, the decision to lower interest rates is supported by historical data, and the upward adjustment of inflation expectations is a judgement of the future, which are not contradictory."

The second point that exceeded expectations is that the ECB did not make any commitments regarding the future interest rate path, but rather emphasized data dependence and case-by-case discussion. Combined with the upward revision of economic data, the ECB's next move may still be more cautious. It is expected to maintain interest rates in July. Due to the two more hawkish information, after the interest rate cut landed, the euro-to-dollar exchange rate jumped slightly.

In addition, the ECB reiterated that it will reduce its holdings of the emergency bond purchase plan (PEPP) by an average of 7.5 billion euros per month in the second half of the year, and the specific approach will be basically the same as that of the asset purchase plan.

Looking ahead, considering that the economy of the euro area is slightly weaker than that of the United States, and inflation has fallen more smoothly, Zhongtong Securities expects that the ECB may cut interest rates about two more times this year, perhaps cutting interest rates once in September and December respectively.

After the Swiss National Bank, the Swedish Central Bank, and the Bank of Canada announced rate cuts, the ECB followed suit and announced a rate cut, easing global liquidity, which is conducive to releasing the monetary policy space of other countries and also beneficial to global risk assets.

Risk warning: Overseas recovery exceeds expectations; inflation rebounds more than expected.

The translation is provided by third-party software.


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