I’m excited to share a new policy brief I co-authored with Alexander Glas (ZEW Mannheim). The policy brief focuses on financial analysts‘ disagreement about the ECB’s future interest rate path. On June 6, 2024, the European Central Bank (ECB) lowered its policy rate for the first time in almost eight years, reducing the main refinancing operations (MRO) rate from 4.5% to 4.25%. As we approach the next ECB monetary policy meeting on July 18 in Frankfurt, our analysis delves into the perspectives of professional forecasters and market analysts from the ZEW Financial Market Survey.

Our findings reveal that while there is a consensus on the timing of future interest rate cuts, with anticipated reductions in September and December of this year and additional cuts in March and June of the following year, 97% of forecasters do not expect a rate cut this July. Despite eurozone inflation slowing to 2.5% in June, there remains significant disagreement about inflation in 2024. Notably, services price inflation continues to rise, potentially driven by events like the European Championship, the Olympics in Paris, and the summer tourism season. Our main finding of considerable heterogeneity in expected interest rate paths also holds for the US, and the forecasters predict a decoupling between the interest rates of the two major central banks.   

I invite you to read the policy brief for a comprehensive understanding: Link to the policy-brief

Link to the press statement of the ZEW in Mannheim: Link

Media Coverage:

  • Christian Siedenbiedel discussed the policy brief in the Frankfurter Allgemeine Zeitung (one of Germany’s leading economic newspapers) on July 9 (“Das große Zins-Szenario”): Link to the Article
  • ntv also reported on our policy brief: Link to ntv

Source: Glas, Alexander and Julius Schölkopf (2024). How Much Do Financial Analysts Disagree on the Future Path of the ECB’s Interest Rate? ZEW policy brief 2024-12, Mannheim.


Comments are closed

WordPress Cookie Plugin von Real Cookie Banner