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DAX 40 Outlook: ECB keeps its feet on the ground – interest rate cut possible in June
As expected, the European Central Bank (ECB) left its key interest rate unchanged at 4.50 percent when it comes to interest rate changes this Thursday. However, the monetary authority signaled a rate cut for the summer. However, given the ongoing interest rate concerns in the US, the domestic evil barometer is slipping below the psychologically important 18,000 points.
Key interest rate at 4.50 percent – Christine Lagarde keeps interest rate cut fantasy alive
As expected, the ECB left the key interest rate unchanged as the euro watchdog announced on Thursday. The deposit interest rate for banks remains at four percent.
Meanwhile, President Christine Lagarde hinted at a turnaround in interest rates. “If the updated assessment of the inflation outlook, the dynamics of core inflation and the strength of monetary policy transmission should further strengthen the Governing Council's confidence that inflation is moving towards target on a sustainable basis, easing the current monetary policy tightening would be appropriate,” it said.
The ECB last raised interest rates in September 2023 in the fight against inflation. In March, price pressures were 2.4 per cent, 2.6 per cent in February and 2.8 per cent in January. Over the medium term, the central bank is aiming for 2.0 percent, which is now again achievable.
Lagarde had already said in March that the central bank would have enough security in June to decide on an initial interest rate cut.
Despite a promised interest rate cut in June, investors in the German stock market remain skeptical about the shape of future monetary policy in the United States.
On Wednesday, U.S. consumer prices were stronger than expected, putting a serious damper on interest rate cut speculation.
CME Group's “Fed Watch Tool” now estimates a June 12 rate cut of 21.6 percent. A week ago the probability of the scenario in question was almost 60 percent.
Inflation figures for Germany and US data at a glance
On Friday, investors should keep an eye on final inflation figures from the Federal Republic of Germany (8:00 am) and Michigan consumer confidence. Later, further speeches by representatives of the central bank could provide important impetus. In addition to Bostick from the Atlanta Fed (8:30 p.m.), Daley from the Fed will make a public appearance in San Francisco.
