Bankinter | ECB minutes from the 10/11 September meeting. Conclusions: Monetary policy is appropriate to respond to the inflation environment in the EMU and the ECB is in a comfortable position to wait for more visibility on fiscal and trade policies.
Everything points to the cycle of cuts having ended for now, even if US tariffs continue to impact growth and prices: ‘the current level of interest rates is sufficiently robust to handle shocks, given the balanced risks to inflation and growth and taking into account a wide range of possible scenarios’.
Bankinter analysis team’s view: Our central scenario is that the ECB will not make any further interest rate cuts and only if inflation falls well below the 2% target in 2026 do we contemplate the possibility of an additional cut. The perception that the ECB will not make any changes to interest rates for the time being has been reinforced by recent statements from Lagarde pointing out that inflation risks are diminishing.
