Wells Fargo expect 25bp rate cut from the European Central Bank in June, then in September

We have been hearing plenty from European Central Bank officials about a basically locked-in June rate cut, but they all express caution on the path after that.

I speculated earlier that this caution after June is a bit of a ruse to diminish the probability of a rout for the EUR.

On ECB rate cuts Wells Fargo are not cautious:

  • expect a 25 bp cut in June
  • “We expect the ECB to hold rates steady in July, before delivering another 25 bps rate cut in September.”
  • base case is of rate cuts of 100 bps this year

The caveat, says the analysts:

  • “If wage or price inflation fails to slow as much as we expect, the risk is tilted to a lesser 75 bps of cumulative easing to 3.25% over the rest of this year”

This article was written by Eamonn Sheridan at www.forexlive.com. Source