For almost two years now, readers of weekly notes such as this one will have been hard pressed to find a week where interest rates or monetary policy haven’t been mentioned. We have covered a range of developments since the first European Central Bank (ECB) rate hike of this cycle back in July 2022. In the coming week, the six members of the ECB Executive Board and the 16 governors of the Euro Area central banks will vote on where to set the Eurozone’s interest rate. Many expect to see interest rates finally lowered by the ECB.


Since July of 2022 the ECB raised borrowing rates by a cumulative 450 basis points with the deposit rate at an all-time-high of 4%, and marginal lending rate at 4.75%. Inflation however remains somewhat sticky in the Eurozone, with preliminary figures released last week indicating that headline inflation remains above its 2% target, at 2.6% (more below).  The ECB’s Survey of Professional Forecasters indicated that a 25-basis point cut is expected this week, followed by a further three cuts of a similar size throughout the year. Whilst these forecasts are always subject to change and in no means represent a certainty, the news provides some solace to tracker mortgage holders who will see lower interest payments on their mortgages throughout the year.


As always, if you wish to discuss anything in this newsletter in further detail, please do get in touch.