The brokerage now expects 100 basis points (bps) of rate cuts by the end of the year compared to 75 bps expected earlier.
It said the recent slowing of core inflation could reflect transitory factors fading out, making the trend hard to gauge, while stronger wage data may give more “stickiness”.
The brokerage warned that disruption to shipping from the conflict in the Red Sea could add to inflationary pressures.
“To avoid raising the number of cuts from three to five, we assume that the ECB skips July and then starts back-to-back cuts in September,” said Greg Fuzesi, economists at the brokerage.
Markets expect the first ECB rate cut in April. Traders had earlier expected a cut in March. Among major brokerage, Barclays and UBS Global Research expect the start of cuts in April.
Source: Economy - investing.com
