John Fahey: ECB keeping its options open on rates outlook

An additional 50bps of easing by year end is a plausible scenario

President Lagarde has stated that the ECB’s confidence in the inflation outlook, and in turn achieving its 2% inflation target, has been increasing over recent months. 

We saw further signs last week that central banks are starting to alter their monetary policy settings, with the announcement of rate cuts. 

This is against the background of a sustained fall in inflation which in turn has given central banks more confidence in achieving their respective inflation targets. Both the Bank of Canada and the ECB announced interest rate cuts, which followed on from the Swedish Riksbank easing its interest rate levels in May.