Nomura predicts the European Central Bank will implement one more rate cut in 2024, specifically a decrease of 25 basis points in June. This is a revision from their earlier expectation of rate cuts taking place in both April and June.
Nomura now anticipates that the European Central Bank will lower rates just once in 2024, with a 25-basis-point reduction expected in June. This marks a shift from their earlier outlook, which had projected two cuts—one in April and another in June.
Economic Conditions And Inflation Trends
What this means is quite clear. The institution has adjusted its forecast after reassessing economic conditions, monetary policy signals, and inflation trends. In other words, factors that previously suggested a more aggressive pace of easing no longer seem as strong. Inflation data, growth patterns, and policy decisions continue to shape expectations, making such revisions necessary.
If the central bank moves as predicted, financial markets will react accordingly. Interest rate futures should adjust to reflect this revised stance. Yield curves might shift, with short-term rates remaining sensitive to any further guidance from policymakers. Trading strategies will need to take into account both the timing and scale of potential monetary easing.
There’s also the question of market positioning. Investors who had expected multiple rate cuts might unwind positions that were built on those assumptions. This can bring additional volatility. If incoming data contradicts Nomura’s outlook—or if central bank officials provide different signals—pricing could move swiftly in response.
Inflation remains a critical factor. Recent months have shown that while price pressures are easing, certain components remain sticky. If inflation slows more than expected, the case for rate cuts strengthens. If it proves persistent, policymakers could hold off for longer than anticipated.
Global Monetary Policy Influences
It’s also worth noticing that other central banks are working through their own policy adjustments. The Federal Reserve and the Bank of England have outlined their own rate strategies, and those decisions could influence expectations in the Eurozone. If global monetary conditions shift faster than expected, this might force a rethink of current forecasts.
Past market behaviour suggests that when traders face uncertainty over rate cuts, short-term positioning can become unpredictable. Whether assets are priced accurately for this potential change depends not just on central bank decisions, but also on broader macroeconomic trends.
The key now is monitoring the data. Economic reports ahead of June will offer further clues on the likelihood of this rate move. Market pricing can pivot quickly when expectations shift, and staying ahead of these changes will be necessary.
