UBS CEO urges ECB to take cautious approach, suggests ‘moderate’ rate cut
A “moderate” interest rate cut would be the appropriate course of action for the European Central Bank, according to UBS CEO Sergio Ermotti.
His comments came ahead of a highly anticipated ECB meeting on Thursday, with analysts suggesting that the most likely outcome would be for policymakers at the central bank to deliver a quarterly rate cut.
When asked for his opinion on the appropriate course of action for the ECB, Ermotti replied, “I think a moderate cut.”
“There is room for the ECB and, in general, the central banks as I said before, they may cut, but the scope and size of the cuts must correspond to the first mandate, which is to fight inflation and finally (to) stimulate the economy,” Ermotti told CNBC “Squawk Box Asia.”
The ECB, which sets monetary policy for the 20 countries that share the euro, kept interest rates at 3.75% in July.
– Sam Meredith
The ECB will likely reduce rates in September – but not cut more than expected this year, economists said
The big question for many market participants on Thursday is not whether the European Central Bank will cut interest rates – but what comes next.
“I think that there is a broad consensus not only among economists but also in the (ECB governing) board that there will be a rate cut of 25 basis points. The big question is what signal it will send,” President Cyrus de la Rubia. economist at Hamburg Commercial Bank, told CNBC’s “Squawk Box Europe” on Friday.
“It is a difficult situation because you have this core inflation that will rise in September, according to our inflation (forecast), to 3.2%. You also have the view of Philip Lane, the chief economist of the ECB, that wage increases will be higher in the second half this year.”
Hamburg’s Commercial Bank’s De la Rubia said he was “fairly skeptical” further interest rate cuts would follow the September cut.
“It’s an environment where it’s hard to argue, ‘Okay, now let’s move on to further steps.’ So, I think they will stick to the approach of meetings and be cautious,” said De la Rubia.
– Sam Meredith
The ECB is set to cut interest rates just days before the Fed’s big decision
The headquarters of the European Central Bank (ECB) is pictured before the ECB’s press conference on Eurozone monetary policy in Frankfurt am Main, western Germany, on July 18, 2024.
Kirill Kudryavtsev Afp | Getty Images
The European Central Bank on Thursday is set to cut rates again by 25 basis points just days before the US Federal Reserve begins its own cycle of rate cuts.
Traders are widely expecting interest rate cuts at the September 17-18 Federal Reserve meeting, as well as at this week’s ECB meeting.
In July, the ECB left interest rates unchanged in a unanimous vote after June’s landmark cut. At the time it described the potential for September cuts as “wide open.”
The ECB’s key interest rate – which helps price all types of loans and mortgages in the bloc – is currently at 3.75% after years of aggressive increases.
Read the full story here.
– Annette Weisbach
