ECB’s Simkus: The ECB has arrived at neutral level of rates

• The ECB has arrived at neutral level of rates.
• Important ECB doesn’t commit to one direction or another.
• Rates may still have to come down as risk has increased that inflation will be below projections.
• Important to take a pause on rates.
• I don’t reject possibility of another rate cut in 2025.
• Inflation may be lower than the target in medium term.

The neutral level of rates according to the ECB is between 1.75% and 2.25%. The ECB has taken a pause for the summer. They will take this time to see how the data evolves and then decide what to do from September onwards. The market expects the last cut coming in December.

This article was written by Giuseppe Dellamotta at www.forexlive.com.