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    The ECB will not be able to cut interest rates too much – Commerzbank

    Source Fxstreet
    Jan 30, 2024 10:23

    Economists at Commerzbank expect the European Central Bank (ECB) to find hurdles to cut interest rates.

    Difficult for the ECB to cut interest rates significantly

    Even if inflation has shown a promising downward trend in recent months, the remaining path to the 2% target is likely to be bumpy. In any case, structural factors such as ongoing de-globalisation and the energy transition should drive up costs for companies and ultimately consumer price inflation. 

    If the effects of a particularly tight labour market also take effect, this is a further argument for upside risks and inflation settling at a higher level. This should make it difficult for the ECB to cut interest rates significantly, as many expect.

     

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