ISTANBUL

Experts think the European Central Bank (ECB) may have ended its cut cycle and that the bank is not expected to cut rates at its next meeting this month due to the ongoing inflation trend in the eurozone and the slow but steady economic recovery.

All eyes in Europe turned to the ECB’s monetary policy decision this week, while the ECB President Christine Lagarde’s statements are expected to give hints into the bank’s future policy roadmap.

Bas van Geffen, senior macro strategist at Dutch Rabobank, told Anadolu that the data releases since the September meeting have been slow, noting that “the doves may cede their push for a cut fairly quickly this month.”

Geffen stated that he does not expect a policy change nor new guidance into future decisions from Lagarde’s speech this week, emphasizing that by December — when a more comprehensive policy discussion will take place — more new data will have been available.

“We believe the ECB’s cutting cycle is done, but additional easing requires a materialization of significant downside risk, and we maintain that the ECB’s cutting cycle is effectively done,” he said. “The ECB also holds in December, the odds that the next move will be a rate hike increase substantially.”

Marco Wagner, senior economist at Commerzbank, told Anadolu that the ECB is almost certainly unlikely to change its key interest rates amid supply chain bottlenecks, adding fuel to the inflationary pressure.

“According to the ECB survey, consumers currently expect inflation to exceed the 2% target,” he said.

Peter Vanden Houte, chief economist at the ING Group, told Anadolu that the data releases since September, when the ECB had its last policy meeting, did not provide definitive results, while consumption and industrial production in August was “disappointing.”

He noted that the Purchasing Managers’ Index (PMI) in October pointed to steady growth despite the continuing challenges in the manufacturing sector.

“Headline inflation in September did exceed the ECB’s 2% target for the first time since April, but we know that energy prices will push inflation below 2% again in the next few months; so, all in all, the picture of a steady, albeit subdued, recovery continues to hold,” he said.

“In these circumstances the ECB has little reason to alter monetary policy. We believe that interest rates will remain unchanged, with President Lagarde reiterating that the ECB is still in a good place,” he added.