ECB’s Knot: Projection round meetings will be key for rate decisions

The ECB is going to lean heavily on staff projections, despite their poor track record. If that’s the case, why not let the staff make the decisions?

• Policy rates will slowly but gradually move to less-restrictive levels
• Based on March projections, optimal policy would have been broadly in line with 3-4 rate cuts this year
• Wage growth elevated and will be bumpy in 2024 so unclear what optimal policy path June projection will show
• Have to avoid any commitments on a specific future rate path

The next ECB decision is on Thursday as part of a busy week on the economic calendar.

This article was written by Adam Button at www.forexlive.com.