/STIR: Goldman: ECB June Guidance Strengthened, Pace Debated

Goldman Sachs write “with the ECB heavily guiding towards a first cut in June, market focus has moved on to the pace of subsequent cuts.”

• “A key determinant of the pace of cuts could ultimately be the ECB’s assessment of downside risk to growth.”
• “Ultimately, we don’t think a rebound in economic activity should put cuts into question as disinflation is primarily supported by the fading impact of past supply shocks, but it would reduce the urgency to cut.”
• “We believe this judgment will be a better guide to European front-end pricing than the likelihood of Fed cuts and continue to expect further widening between US and EU front-end rate spreads.”