Markets Expect ECB Rate Cuts in 2024

Markets are of the view that we have seen the final ECB rate hike, following last Thursday’s 25bps increase, which brought the key deposit rate up to 4%. The ECB commented that the marked tightening of monetary policy since July 2022 will have a substantial impact in terms of bringing inflation back down to its 2% target in a timely manner. It warned, though, that rates will need to be maintained at current levels for a sufficiently long period of time to ensure their inflation goal is met, suggesting that monetary easing is not on the horizon anytime soon.