MNI BRIEF: ECB Projections Useful Guide For Rate Cuts–De Cos

Market pricing for rate cuts in 2024 inside the European Central Bank December projections are a “useful reference” for when the ECB will begin to cut and how much this year, Bank of Spain Governor Pablo Hernandez de Cos wrote in an article on Tuesday.

“A useful reference is that which is implicitly included in the Eurosystem projections,” Hernandez de Cos said, adding that at the moment of the cut off for the projections the median of analyst expectations saw the first cut for the beginning of the third quarter and that the ECB would close 2024 with rates at 3.25%, reducing them to 2% over the long term.

Hernandez de Cos was satisfied with the speed of decline in inflation. This has occurred faster than expected due to factors including stronger-than-expected transmission of monetary policy, but uncertainty remains high, he said, adding that rate decisions will depend on incoming data. (See MNI INTERVIEW: ECB Could Discuss Cut Timing In Jan-Centeno)