ECB

The European Central Bank (ECB) announced on Thursday a 25 basis point cut in the deposit facility rate to 3.5%. It cut the interest rates on the main refinancing operations and the marginal lending facility by 60 basis points to 3.65% and 3.9% respectively. The ECB said lower inflation and economic growth allowed it to ease its tightening slightly. However, there was no clear hint of further rate cuts in October.

European Central Bank (ECB) President Christine Lagarde said at a news conference on Thursday that inflation is expected to pick up in the second half of the year, and wages are still rising at a high rate. A further modest easing of monetary policy tightening would be appropriate. Decisions will be made on a meeting-by-meeting basis in the future, with no commitment to any particular rate path.

On Friday, August 30, Isabel Schnabel, Member of the Executive Board of the ECB said that while data largely confirmed the ECB's baseline outlook and boosted confidence that the price target will be achieved by the end of 2025, services inflation remains high and could hamper a pullback in headline inflation.

The ECB should be careful and must not lower policy rates too quickly, given that inflation has yet to return steadily to 2%, ECB Governing Council member Nagel said on Thursday.

ECB Chief Economist Philip Lane said on Thursday that wage growth in the euro area, a key driver of inflation, will slow sharply in 2025 and 2026, boosting confidence in inflation returning to the 2% target.

median consumer inflation perceptions over the previous 12 months declined noticeably, while median inflation expectations for the next 12 months remained unchanged and those for three years ahead edged up.

On Thursday, the European Central Bank (ECB) released the minutes of its July meeting, indicating that domestic price pressures remain elevated, with services inflation persisting at high levels. Headline inflation may still be above the target in 2025. The committee members generally believe that the September meeting presents the optimal opportunity to decide on interest rate cuts and should be approached with an open mind.

ECB Governing Council member Kazaks made an important speech on Thursday at the annual meeting of the Jackson Hole Economic Symposium, where he expressed his openness to another rate cut at next month's meeting. He was confident that inflation would move to the 2% target, although he remained cautious about the economic outlook.

Following the conclusion of monetary policy, the ECB publishes its fifth Economic Bulletin, which provides the economic and monetary information that forms the basis of the Governing Council's policy decisions.