The ECB plans to cut rates amidst 18.4% accumulated inflation since 2019 and rising monthly CPI—an absurdity.

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ECB to cut rates in June, but economists split on risk around timing

BENGALURU, Feb 29 (Reuters) – The European Central Bank will first cut interest rates in June, according to a near two-thirds majority of economists in a Reuters poll, though they were split on the chances of the cut coming earlier or later than they expected.
Inflation, which the ECB targets at 2.0%, moderated to 2.8% in January from a peak of 10.6% in October 2022 and is expected to drop further. But policymakers have made clear they are not yet ready to consider cutting rates, even as growth falters.

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“There is always a risk that as soon as the economy recovers just a tiny bit, inflation will come back so that argues against aggressive rate cuts,” added ING’s Brzeski.
Despite a strong consensus around the first rate cut, economists were divided on the risks around their forecasts. When asked what was more likely around the timing of the first reduction, a roughly 55% majority of respondents, 17 of 31, said earlier than they expect. The rest said later.

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