Frankfurt am Main. An ECB interest rate cut is considered certain on Thursday – but by how much? Analysts have a clear idea about this and make predictions.
O Ukrainian War and companions Energy crisis there were two big ones from spring 2022 Inflation Drivers. O European Central Bank (ECB) and other central banks, such as the Fed, quickly and sharply raised key interest rates in order to control inflation. This had positive effects mainly for investors, who received significantly higher interest on a fixed-term deposit or an overnight deposit. But this could soon end.
Economist classifies ECB decision on interest rates – “data situation remains ambiguous”
after ECB interest rates in April had not changed, the signs from June 6 clearly point to a rate cut. It has been since October 2022 inflation rate has fallen steadily in the euro area and has been at 2.4% since April. The ECB targets an inflation rate of two percent. Experts assume this will be achieved by summer. At the same time, the economy is weakening – lending and therefore investment are being slowed by high policy rates.
Katharine Neiss, European chief economist at PGIM Fixed Income, says: “The data remains ambiguous on the question of whether domestically generated income inflation again reached a level where the General inflation is permanently at two percent.” Neiss assumes that ECB interest rate cuts are imminent, but that they will only occur on a limited scale and gradually. Other experts also share this assumption.
The ECB’s three key interest rates:
1. Master Refinance Operations (MRO):
- Definition: This is the interest rate at which commercial banks can obtain short-term loans from the ECB.
- Current interest rate: 4.50 percent
2. Deposit Facility Fee (DFR):
- Definition: This is the interest rate that commercial banks receive if they park excess liquidity at the ECB overnight.
- Current interest rate: 4.00 percent
3. Marginal Lending Facility (MLF):
- Definition: This is the interest rate at which commercial banks can borrow from the ECB overnight.
- Current interest rate: 4.75 percent
How much will the ECB reduce interest rates? Experts with clear expectations
The interest rate on deposits is particularly relevant for investors. Banks park customers’ money and receive interest from the ECB, which they pass on in whole or in part protector pass along. Some providers like The Commercial Republic gives interest on overnight money passed on individually to customers. Others keep part of it as profit. Colloquially, we often talk about just one policy interest rate, but strictly speaking, there are three.
Others also see Katharine Neiss Economists a gradual Interest rate cut come over. “In our forecast, we assume a further interest rate cut of 0.25 percentage points per quarter,” Jan Holthusen, head of research at DZ Bank, told Business Insider. It assumes that these interest rate cuts will extend until 2025. The ECB will therefore not reduce interest rates as much as it has increased them from 2022 onwards.
Dates of ECB meetings with interest rate decisions:
| Date | Location |
| June 6, 2024 | Frankfurt am Main |
| July 18, 2024 | Frankfurt am Main |
| 09/12/2024 | Frankfurt am Main |
| October 17, 2024 | Central Bank of Slovenia |
| 12/12/2024 | Frankfurt am Main |
ECB initiates interest rate turnaround: Why US likely won’t follow suit
What will be innovative will be the way inflation and the economy develop in the coming months, explains Daniel Hartmann of asset manager Bantleon. Jan Felix Gloeckner, Senior Investment Specialist at Insight Investment, also believes that the ECB will be the first major central bank to initiate an interest rate turnaround. Observers assume that the US Federal Reserve Bank will initially keep its key interest rates unchanged.
On the one hand, it is Inflation in the USA At 3.4% in April, it was still significantly higher than in Europe. On the other hand, the economy is stronger. This is notable because, for the first time in decades, the ECB is expected to react more quickly than the Fed. What does this mean for this? Fixed deposit and daily? In our financial ticker, we have recently frequently reported on interest rate reductions for fixed-term and call money accounts. Many banks are already pricing interest rates.
Fixed-term deposits before ECB interest rate decision: savers now benefit from two factors
Financial experts like Holthusen don’t see any big surprises here. Interest rates have reached their peak. “Interest rates will likely rise if the Top interest rates decline of a similar magnitude.” Savers can still get strong fixed-term deposit deals after ECB interest rate decision handbag. Ours offers attractive conditions and stable deposit protection June Fixed Deposit Interest Rate Comparison O Fixed term deposit plus from Klarna.
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Furthermore, the real interest rate on fixed-term and current deposits is high, exceeding four percentage points, due to lower inflation and high key interest rates. “A fixed-term deposit is more profitable than it has been for many years,” says Verivox managing director Oliver Maier in his Recommendation for fixed-term deposits before ECB interest rate decision together. The comparison experts Verivox We advise transferring excess daily cash to fixed-term deposits.
What is the real interest rate?
The real interest rate is the interest rate that takes inflation into account. It shows the real purchasing power of interest income or debt. A positive real interest rate means that the value of money is increasing, while a negative real interest rate indicates that inflation is exceeding interest income. When comparing forms of investment such as fixed-term deposits and overnight currency, the real interest rate is crucial as it reflects the real return after deducting the inflation rate.
According to Verivox, the real interest rate can be calculated using the following formula: [Nominalzins] – [Inflationsrate] = [Realzins]
If the inflation rate were zero percent, the real interest rate and the nominal interest rate would be practically identical.
Unlike fixed-term deposits, daily interest rates may vary depending on the ECB meeting change quickly on June 6th. On a fixed-term deposit, interest is fixed for the agreed period. Industry experts such as Weltsparen specialist Katharina Lüth advise around three monthly net salaries daily to create. For long term Investment objectives Titles like a are suitable ETF. An insurance Money market funds are also an alternative to overnight money.
Construction loans and ECB interest rates in June – finance experts remain skeptical
The ECB’s interest rate decision will also be interesting for borrowers. If interest rates fall, that usually means they will fall as well. Loan interest sink. Especially with large financings like a Construction loan is the interest decisive. Even small jumps in interest rates are noticeable here. Experts like Michael Neumann, from the credit broker Dr. Small However, they are cautious in their forecasts and do not expect much from the ECB’s interest rate decision.
The market has already priced in possible interest rate cuts by the ECB when constructing interest rates.
Michael Neumann – credit broker Dr. Pequeno
According to Neumann, it will be ECB decision on interest rate on June 6th will have little impact on the construction of interest rates. “The market has already priced in possible interest rate cuts by the ECB when constructing interest rates,” says Neumann in his comment on interest rates. Similar to banks with term and overnight deposits, which had already adjusted their interest rates in recent weeks and months in view of the next ECB meeting. There is now more dynamism in the stock market.
more on the subject
ECB Decision on Stock Market Interest Rates: Unclear Interest Rate Path Causes Uncertainty
Uncertainty ahead of the ECB’s next interest rate decision dragged the German stock market lower on Tuesday. The Dax extended its initial losses and temporarily fell to lowest level over four weeks – in the end, the leading index lost 1.09 percent to 18,405.64 points. Financial markets are firmly established with a ECB interest rate cut “The interest rate trajectory for the rest of the year is not yet so clearly outlined,” noted Landesbank Helaba.
Investors have acted correspondingly cautiously recently. “Judging by the ECB’s recent statements, this is another Interest rate cutin July “Unlikely,” said Daniel Loughney, a bond specialist at fund Mediolanum International. It is therefore possible that the ECB’s interest rate decision on 6 June will not lead to too much turmoil in the credit and equity markets. However, these are all predictions. It remains to be seen what the consequences of future and subsequent decisions on interest rates will be.
With DPA material