The results of a survey of 82 economists conducted by Reuters from May 21 to 28 showed that the ECB will almost certainly cut interest rates at the June meeting, and possibly ease monetary policy again in September and December. Meanwhile, financial markets are pricing only two ECB rate cuts in total in 2024.
Despite the decline in consumer inflation, the recent acceleration in wage growth has raised questions about how quickly the ECB will be able to cut rates after the June meeting.
All 82 economists polled by Reuters expected the ECB to cut the deposit rate by 0.25% at its June 6 meeting. Meanwhile, 55 out of 82 respondents predicted that the ECB would cut the rate two more times before the end of the year, in September and December. That was up from just over half in an April survey. The latest survey also revealed that only 22% of respondents now forecast a deposit rate of 3.00% or lower by the end of 2024, compared with almost 40% last month.
As for the inflation outlook, a separate survey found that CPI growth accelerated to 2.5% per annum in May from 2.4% per annum in April. It was not expected to fall to target until Q3 2025.
Economists also forecast that eurozone GDP will grow by 0.3% this quarter and next. Economic growth was seen averaging 0.7% this year, an upgrade from the last poll.