He euribor wait for the rate drop which is scheduled to be announced today European Central Bank (ECB) at year lows. After the last daily drop, the average for the month of October of the indicator to which most mortgages in Spain stays in 2,760%which translates into savings for mortgage holders who renew their mortgage credit with this data from October of more than 2,000 euros in some cases. The experts They estimate that this drop of 25 basis points that Christine Lagarde may announce does nothing more than underpin the continuous decline of the Euribor, which after peaking last year has embarked on a downward path until closing the year at around 2.5%.
How much will the Euribor go down?
He ECB Thus, it will once again cut interest rates by 25 basis points at its meeting this Thursday, thus giving continuity to the quarter-point adjustment undertaken in September, according to experts, who also do not rule out a new drop in December. This leads to a forecast that, if there are no external agents, the Euribor will end this 2024 around 2.5%. In the conclave last September, the governing body of the ECB decided to cut rates interest by a quarter of a percentage point for the second time this year, after the adjustment in the same proportion carried out in June and not having modified the rates at the July meeting.
The picture that the Euribor data leaves for now is that it continues to decline. Sergio Carbajalresponsible for mortgages Trackerpoints out that the Euribor has been falling for 13 months, but previously it had been rising for 22 months and “always after a notable rise comes a movement of correction and adjustment, which is where the Euribor is now.”
For your part Enrique Díaz-Álvarez, Risk Director at Eburyexplains that the Euribor continues to fall sharply, since the markets foresee increasing cuts by the European Central Bank (ECB). “Inflation data in the euro zone for the month of September has fallen below 2% for the first time since the beginning of 2021. Although the underlying index – more significant – stands at 2.7%, the disinflationary trend “is undeniable and will provide cover for further monetary relaxation.”
From iSavings Its spokesperson Laura Martínez shows surprise at the data currently collected by the Euribor “because it was expected for the end of the year”, but “everything has been brought forward and if we continue like this we will be around 2.6%.” Of course, “since it is an indicator so sensitive to external elements, we will have to wait.” From this mortgage comparator they believe that the Euribor in December will remain at 2.6%.
The ECB will lower rates again according to experts
If analysts’ expectations for this Thursday, October 17, are confirmed, the interest rate of the deposit rate, taken as a reference, will remain at 3.25%. Likewise, it would be the first drop in interest rates by the ECB that does not coincide with the publication of new macroeconomic projections by the institution in this cycle, which would suggest greater confidence by the ECB in the disinflation process and its attention to the weakness of growth in the euro zone.
In this regard, since MFS Investment ManagementIn statements to Europa Press, Peter Goves, head of Sovereign Debt Analysis for Developed Markets, is convinced of the 25 basis point cut at this Thursday’s meeting given the further deterioration of the euro zone’s growth prospects and the rhetoric of the institution itself, after Christine Lagarde expressed greater confidence before the European Parliament that inflation will reach its objective.
Felix Feather, economist at abrdnalso considers it “almost certain” that the ECB will lower rates by a quarter today in response to weak growth and lower-than-forecast inflation, while it is likely that the entity “will make further cuts of 25 basis points in December.” , January and March”, without ruling out that any relatively slight deterioration in the bloc’s growth could push the ECB to cut rates even more aggressively.
The year-on-year inflation rate of the euro zone moderated in September to 1.8% year-on-year, four tenths below the rise in prices in August and the lowest reading of the data since May 2021, while the GDP expansion of The region slowed by one tenth in the second quarter, to 0.2%, and the forecasts for Germany, the main European economy, point to a negative evolution in 2024.
In this sense, Luis Merino, responsible for Fixed Income, Mixed and Fund Selection of Santalucía AMmaintains that the current macroeconomic context will allow monetary authorities to continue with the cycle of interest rate cuts already begun on both sides of the Atlantic and, in the remainder of 2024, expects two additional drops of 25 basis points each. , both for the ECB and for the United States Federal Reserve.
Along these lines, Sergio Ávila, senior analyst at IG Marketsis also betting on a 25 basis point rate cut by the ECB at today’s meeting, with the forecast of a new adjustment in December, as well as a new Fed cut in November.
For his part, Kevin Thozet, member of the investment committee of Carmignacstates that the downward surprises in growth and inflation in the euro zone suggest “another interest rate cut of 25 basis points at this week’s meeting” and points out that, although the ECB would maintain its message of a pragmatic and gradual approach, fixed income markets are already anticipating rate cuts at each ECB meeting until April 2025, placing the deposit rate at 2% next summer.
For its part, since Ebury point out that, while a 25 basis point cut is taken for granted this week, so the decision will not have any real impact on the euro, the interest of this Thursday’s meeting will focus on the signals issued by the bank in its communications, with particular focus on the tone on growth prospects, as any sign of increased unease among members could indicate that the ECB is willing to cut rates at a faster pace than markets currently anticipate.
On this matter, the fintech predicts a third consecutive cut of 25 basis points when the ECB holds its next meeting in December and maintains its stance of quarterly rate reductions next year, although it warns that any suggestion by the ECB that it could A more aggressive pace being needed to address the slowdown in the economy “could weigh on the euro this week.”
