Nick Kounis, Head of Financial Markets and Sustainability Research at ABN Amro, notes that the European Central Bank (ECB) President asserted that while the Governing Council would be ‘data dependent’ it was ‘not Fed dependent.’

ECB will cut policy rates at each and every meeting from June on wards

"Overall, we think the ECB’s communication is consistent with a start of a rate cut cycle at the June Governing Council meeting. A large majority of officials seemed to be minded to support a June rate cut and the ‘few’ that did not thought that the data already justified a decision at this meeting. Looking further forward, the ECB would not pre-commit ‘to a particular rate path’ but would ‘follow a data-dependent and meeting-by-meeting approach’."

"Our own base case is that the ECB will cut policy rates at each and every meeting from June onwards. We take the view that interest rates are currently deeply in restrictive territory. Estimates of the neutral rate are half or less than the current level of the deposit rate. Given that the eurozone economy has been stagnating for more than a year, the only justification for restrictive monetary policy has been above-target inflation. However, the inflation picture is changing fast. Even assuming 125bp of rate cuts this year, monetary policy would still be restrictive at the end of 2024."