With inflation dropping faster than expected in many countries and the economic outlook worsening, policymakers were expected to hold rates steady — with the possible exception of Norway's central bank. With little rate action expected on Thursday, investor attention has shifted to when central banks might start cutting rates, even as policymakers insist it is still too early to sound the all-clear on inflation. Many analysts think the ECB will start slashing rates in June, but a recent fall in eurozone inflation has prompted some to predict a first reduction as early as April. "The lower the ECB's growth and inflation forecasts for 2024 and 2025, the higher the likelihood of rate cuts," said ING economist Carsten Brzeski. Lagarde's communication challenge on Thursday would be to "keep all options open" without sounding "too detached from reality," he added.

Source: Manila Times December 14, 2023 16:48 UTC