2024-04-16 16:43:00
« Dependent on data but not on the Fed “. The President of the European Central Bank, Christine Lagarde, affirmed this Tuesday in Washington that the ECB was not coordinating with the monetary policy of the Fed, the American central bank, in terms of the timetable for rate cuts in particular.
« We are data dependent. We had some in March and a little in April. It is on this basis that we must make our decisions and not on the basis of a central bank in the world, even if it is the Fed. », affirmed the boss of the ECB.
Without committing to a date for a next rate cut, Christine Lagarde reiterated that she observed in the euro zone “ a process of disinflation ». « We need to have confidence in this process, but if it continues in the expected direction, if we do not face a major shock, we are heading towards the moment when we must moderate restrictive monetary policy “, she said.
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Inflation plus lower in Europe than in the United States
The central bank of the euro zone could, in fact, lower its interest rates before the American Federal Reserve due to more stubborn inflation in the United States. Inflation in the euro zone fell to 2.4% over one year while in the United States, according to the CPI index, it began to accelerate again to 3.5%, seeming to postpone a start until later. decline in American interest rates.
Asked about the reasons which explain the current inflation differential between the United States and Europe, Christine Lagarde highlighted “ consumer behavior ». « The big difference is consumer attitude: European consumers are very cautious and continue to save considerably “, underlined the manager. “ Why that ? This is due to fiscal policy, energy, but also the fact that American consumers tend to have confidence, spend and save less “, she said.
What consequences for Europe if the Fed lowers its rates after the ECB?
Towards a ECB rate cut in June?
The President of the ECB, however, warned that the road to inflation which remains sustainably at 2%, the objective of the monetary institution, will be ” bumpy “. During the last monthly meeting, last Thursday, the ECB again kept its rates at the highest since 1999, i.e. 4% for the deposit rate, 4.5% for the refinancing rate and 4.75% for the rate. marginal lending facility.
However, many analysts are now betting on a next decline in June, a period also mentioned by the President of the ECB. The Governor of the Central Bank of Lithuania, Gediminas Simkus, even stated that there was a high probability of “that there are more than three rate cuts this year”. This is the first time that a central banker has come forward to this extent on a rate cut.
crux of the Fed ?
In the United States, the horizon for a rapid rate cut is becoming increasingly dark. Indeed, the American central bank (Fed), which had raised its rates to fight inflation, risks waiting before lowering them, in order to avoid an additional rebound in prices. Market players, who until recently anticipated a first drop at the June meeting, are now instead counting on that of September, according to the CME Group assessment.
Recently, a Fed official indicated that the American monetary institution could even be satisfied with just one cut this year, while the markets are hoping for at least two, or even three. And for good reason, during their last meeting, on March 21, the members of the Fed committee (FOMC) announced that they were counting on three rate cuts of 0.25 percentage points this year. A figure down compared to the previous meeting in December at the end of which they had mentioned three or four cuts in order to reduce rates to 4.6% at the end of 2024. As a reminder, they are still in a range from 5.25 to 5.50%.
Questioned on the CNBC channel, the president of the Atlanta Fed, Raphael Bostic, therefore further darkened the picture. “The good performance of the economy in 2023 led me to think that we could move sooner. But inflation is now on a more uneven path and I think we’re going to have to wait and see how things develop.”he explained.
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