Nearly half of economists surveyed by the Financial Times have criticised the European Central Bank (ECB) for being too slow to implement interest rate cuts, suggesting the institution is falling behind market expectations and economic realities.
The comprehensive survey, encompassing 72 Eurozone economists, revealed that 46 per cent believe the central bank has ‘fallen behind the curve’ in its monetary policy decisions. A marginally smaller proportion, 43 per cent, maintained that the ECB’s approach remains appropriate, whilst no economist suggested the bank was ahead of schedule.
Since June, the ECB has implemented four rate reductions, bringing rates down from 4 per cent to 3 per cent, responding to faster-than-anticipated inflation decreases. ECB President Christine Lagarde has signalled further rate cuts in 2025, acknowledging the Eurozone’s anaemic growth prospects. IMF projections indicate a mere 1.2 per cent expansion for the currency bloc next year, substantially trailing the United States’ expected 2.2 per cent growth.
Market forecasts suggest a widening gap between Eurozone and US interest rates by year-end. Whilst the Federal Reserve anticipates just two quarter-point cuts in 2025, market participants expect the ECB to deliver between four and five 25-basis-point reductions.
Professor Eric Dor from IÉSEG School of Management highlighted mounting concerns about economic growth risks, stating the ECB’s cautious approach to rate cuts has negatively impacted economic activity. The majority of surveyed economists project Eurozone inflation will stabilise at 2.1 per cent next year, marginally above the central bank’s target.
The survey also revealed a significant shift in sovereign debt risk perception, with France replacing Italy as the Eurozone country most vulnerable to sudden bond market pressures. This change follows recent political turbulence in France, including the collapse of Michel Barnier’s government over proposed deficit-reduction measures.
Post Disclaimer
The following content has been published by Stockmark.IT. All information utilised in the creation of this communication has been gathered from publicly available sources that we consider reliable. Nevertheless, we cannot guarantee the accuracy or completeness of this communication.
This communication is intended solely for informational purposes and should not be construed as an offer, recommendation, solicitation, inducement, or invitation by or on behalf of the Company or any affiliates to engage in any investment activities. The opinions and views expressed by the authors are their own and do not necessarily reflect those of the Company, its affiliates, or any other third party.
The services and products mentioned in this communication may not be suitable for all recipients, by continuing to read this website and its content you agree to the terms of this disclaimer.