ECB’s Vujčić: Market bets on three rate cuts are not unreasonable

February 7, 2025
-FCHFX

February 07, 2025 at 12:46PM

Don’t see a recession right now, sees a gradual recovery

Expects inflation, including services, to come down

Already have wage moderation, expect that to continue

March and April will be key for a clearer picture on rate path

Tariff threats are a great source of uncertainty

But US tariffs won’t immediately trigger a 50 bps rate cut

March is already a given, so I would take it that he means the two more rate cuts after that are a fair assessment. As things stand, traders are pricing in ~84 bps of rate cuts for the year – including March. That fits with the current balance of risks in play. But if Trump were to go hard on his tariffs threat, I reckon we could see markets price in further downside on rates; even if it might just be a kneejerk reaction.

This article was written by Justin Low at www.forexlive.com.

ECB’s Vujčić: Market bets on three rate cuts are not unreasonable

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