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