2023-12-12 14:35:40
With the consequent slowdown in inflation, European central banks are expected to experience major monetary easing in 2024. Since the beginning of November, government bond interest rates have experienced a considerable decline. Indeed, those of Italy went from 5% to 4%, those of France from 3.5% to 2.7% and those of Germany from 3% to 2.2%. After a historic rise in interest rates to deal with soaring inflation, financial markets are expected to experience a decline in 2024.
A drop yes, but be careful of the runaway
In recent days, the leaders of the European Central Bank (ECB) have been speaking out more and more. Isabel Schnabel, the German member of the executive board, although in favor of rate increases, declared: “ core inflation [hors secteurs de l’alimentaire et de l’énergie, qui sont plus volatils], which had been stubborn, is falling more quickly than we had expected. It’s quite remarkable. Overall, what is happening with inflation is encouraging “. The governor of the Bank of France, François Villeroy de Galhau, also assured that: “ Unless there is a shock, there will be no further increase in our rates; the question of a reduction may arise in 2024, but not now ».
As for the start of this drop in interest rates, opinions differ. The director of economic research at Pictet Wealth Management, Frederik Ducrozet, envisages a first decline “ by June 2024 “. For their part, Goldman Sachs economists see a decline from April. “ March Becomes a Growing Possibility », They explain. According to financial markets, the ECB deposit rate, which rose from -0.5% in 2022 to 4% today, could fall to 2.5% by the end of 2024.
As for the economist at the Standard & Poor’s rating agency, Sylvain Broyer, the time has come for caution: “ There is no reason to rush into lowering rates “. He also wants to ensure that inflation will automatically rise in the coming months, through purely statistical effects. The governor of the National Bank of Slovakia, Peter Kazimir, aligned himself with the same position as Sylvain Broyer, he declared: “ Expecting a rate cut in the first quarter is science fiction “. The meeting scheduled for December 14 by the Board of Governors will therefore be followed very closely. Nevertheless, ” It would be a mistake to think that the end of the monetary tightening cycle is the start of aggressive easing », assure Marchel Alexandrovich, du cabinet Saltmarsh Economics.
Good or bad news ?
It must be said that the drop in interest rates stimulates investment. Historically low interest rates necessarily attract the attention of investors. For example, when rates are low, the French invest a lot in real estate projects. When real estate recovers, the economy is necessarily in better shape.
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