Something for your Espresso: March or April?
Morning from Europe!
The ECB is on the move and the acknowledgement of disinflationary forces being larger than expected in December just a few weeks after the latest staff update is another (baby)-step in the direction of rate cuts.
Markets are honed in on April as the likely timing of the first cut and the logic is probably that the central bank appears hesitant to make a move before it has further shifted its economic forecasts towards a more dovish outlook in March alongside new projections.
Can the ECB move in March?
Chart 1: Markets bet on a cut in April from the ECB
Markets are betting on an April cut from the ECB, but the January HICP may lead to a larger repricing of the March probabilities as well. Meanwhile, the US economy appears to be in a temporary goldilocks phase.