The European Central Bank (ECB) has cut interest rates at each of its past eight meetings, but its cutting cycle is likely to come to an end next week. Eurozone inflation now sits precisely at the central bank’s 2 per cent target; ECB board member Isabel Schnabel said earlier this month that the bar for a further cut is “very high”.
There are arguments in favour even so: inflation is forecast to drop to 1.6 per cent next year, which is making some nervous about a return to deflationary dynamics. The strengthening euro also gives policymakers more room to cut. And the possibility of worse than expected US tariffs also supports an additional loosening of policy.
With the final shape of trade negotiations far from clear, a pause next week looks all but guaranteed. Further ahead, there is a distinct possibility of deposit rates falling below their current level of 2 per cent.
China: PBoC interest rate decision
UK: Rightmove house price index
UK: Public sector net borrowing
US: Richmond Fed manufacturing index
Eurozone: Consumer confidence
Eurozone: Composite, manufacturing and services PMIs (preliminary), ECB interest rate decision
Japan: Manufacturing and services PMIs (preliminary)
UK: Composite, manufacturing and services PMIs (preliminary)
US: Composite, manufacturing and services PMIs (preliminary)
Eurozone: M3 money supply
Japan: CPI inflation
UK: Consumer confidence, retail sales