ECB expected to cut interest rates for third time this year | Wilnesh News

Mojmir Mrak, a professor at the School of Economics and Business at the University of Ljubljana, told CNBC’s “Squawk Box Europe” program on Thursday that the European Central Bank will insist on gradually cutting interest rates in the first half of next year, taking into account geopolitical risks.

“If you compare what happened after the last meeting to what happened today, you’ll see (rates) are going down more slowly,” Mlac said.

“Right now I think we are on a path of lower interest rates, that’s my view. I think central banks will do that gradually because we shouldn’t forget that we live in a very unstable world. If something bigger happens, As oil prices rise in the Middle East, we can make changes now.

Mrak pointed out that gradual interest rate cuts of 25 basis points are still possible in October and December, and further small interest rate cuts will be made in the first half of next year.

—Jenny Reed

European stocks opened mixed on Thursday, with benchmark indexes Stoke 600 At 8:12 am in London, the index was up 0.13%. Banks were the best performing sector, rising 0.75%.

German German DAX Index and french CAC 40 Both rose by about 0.5%, leading the UK FTSE 100stay near the flat line.

The euro traded moderately, falling 0.09% against the U.S. dollar and slightly higher against the British pound.

—Jenny Reed

Jari Stehn, chief European economist at Goldman Sachs, said in an interview with CNBC that despite stronger U.S. economic growth, the euro did not fall more sharply against the U.S. dollar, partly because the European Central Bank did not provide strong guidance on its future path. Powerful guidance.

“The European Central Bank is cutting interest rates, but in a way that is very data-dependent and doesn’t give you a lot of guidance on where to go next,” Stern said. “We think that’s going to be the message today as well.”

“So we’re going to cut rates by 25 basis points, and we think they’re going to say we’re doing that in response to the soft data.”

“I think[European Central Bank President Christine Lagarde]will say, look, if inflation continues to fall, we can cut further, but the magnitude, the pace, all of that will depend on the data. So right now I do think the market is well Got the message.”

EUR/USD has been volatile all year, starting at $1.1044 and falling to $1.0853 as of Thursday.

Stern also told CNBC that it is necessary to remain cautious about the economic outlook of the euro zone.

“Incoming data has been weak and we’re clearly facing challenges ranging from trade to fiscal to manufacturing. We’ve revised our forecasts down multiple times over the summer, and growth next year is basically at 1%, which is lower than the ECB’s level,” he said.

“Right now, we still think we’re growing. So we’re not saying we’re going into a recession, we’re not saying we’re completely stagnant.”

—Jenny Reed

Financial markets have fully priced in the European Central Bank to cut interest rates two more times this year by 25 basis points, which are expected to take place on Thursday and at the central bank’s next monetary policy meeting in December.

That would raise the deposit rate, the ECB’s key interest rate, to 3% by the end of 2024 from 4% in June.

The European Central Bank was one of the first major central banks to cut interest rates, cutting rates by a quarter of a percentage point in June. The Federal Reserve did not engage in monetary easing until September, when it lowered its key interest rate by 0.5 percentage points.

—Jenny Reed