Easing mode

Among the major central banks, the #fed and the #ecb are the ones that move markets the most. With the Fed, the plan is relatively clear: for 2024 we should expect between 3-5 #ratecuts depending on the state of #unemployment and #inflation. What about the ECB? As you can see in the chart below, a poll conducted by FT to 48 economists, shows expectations for rate cuts to start on the second quarter of the year and it shows an incredible smooth path for official rates from the current 4% to 2% ending on the fourth quarter of ‘25. In real life, as shown by history, paths are not that smooth, and rate cuts tend to be more aggressive to cope with slowdowns or recessions, but it seems clear that the two biggest central banks are on easing mode. The reason for that might be that demand has indeed cooled off and inflation might not be a major concern in the short term.