ECB Rate Cuts Likely

FRANKFURT (Reuters) – A further European Central Bank (ECB) interest rate cut is expected to occur in March without much resistance among policymakers, as revealed by three insiders who spoke to Reuters.

The euro zone’s monetary policymakers unanimously reduced rates for the fifth time on Thursday and anticipate that inflation will stabilize at their 2% target this year amidst ongoing weak economic growth.

The three policymakers indicated a consensus for an additional rate cut during the ECB’s March 6 meeting, which would lower the deposit rate to 2.5%. However, they expect a more extensive debate about future cuts afterward, potentially suggesting a pause in April. They requested anonymity as these discussions have not yet taken place among the Governing Council.

An ECB spokesperson refrained from commenting.

ECB President Christine Lagarde stated that the meeting did not address the final destination for rates and that the magnitude and sequence of future cuts will be dictated by incoming data.

Additionally, the ECB’s staff is set to release a new estimate of the ‘neutral’ interest rate on February 7, which neither stimulates nor hinders economic growth. Currently, the ECB estimates this neutral rate to be between 1.75% and 2.50%.