European Central Bank (ECB) President Christine Lagarde addresses a press conference on the Eurozone’s monetary policy, at the central bank’s headquarters in Frankfurt am Main, western Germany, on September 12, 2024.
This was CNBC's live blog covering the European Central Bank's September monetary policy meeting.
The European Central Bank on Thursday delivered a quarter-point interest rate cut, marking its second reduction to the deposit rate this year.
The widely anticipated move comes after a period of sluggish economic growth across the euro zone and cooling inflation, which fell back toward the central bank's 2% target in August.
The ECB lowered its 2024 growth forecast to 0.8%, down slightly from an earlier projection of 0.9%, citing "weaker contribution from domestic demand over the next few quarters."
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For many market participants, the big question was not whether the ECB would cut rates in September — but whether the central bank will provide any clues as to what will follow.
The ECB's Governing Council said in a statement that it "is not pre-committing to a particular rate path," while reaffirming the need to take a data-dependent and meeting-by-meeting approach.
Economists are split over whether policymakers at the ECB will look to pause when they meet again on Oct. 17, as they had done in July, before potentially reducing rates by another quarter-point on Dec. 12.
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The ECB's meeting comes just days before the Federal Reserve appears poised to start its own rate-cutting cycle.
Markets expect ECB to hold rates steady in October
Markets were last pricing in an around 70% chance that the European Central Bank will leave rates unchanged when it makes its monetary policy decision in October, LSEG data showed Thursday.
Probability of another cut in October was last at around 30%.
ECB President Christine Lagarde on Thursday reiterated that policymakers were not "pre-committing to a particular rate path."
"We will continue to follow a data-dependent and meeting-by-meeting approach to determining the appropriate level and duration of restriction," she said.
— Sophie Kiderlin
ECB will 'eventually step up the pace of further rate cuts' — but not this year, ING's Carsten Brzeski says
The European Central Bank will "eventually" cut rates at a quicker pace, but likely not until next year, Carsten Brzeski, global head of macro at ING Research, said in a note on Thursday.
"Why not this year? Because currently, German wage negotiations and increasing selling price expectations still point to some stickiness of inflation," he said.
"And given that the ECB's track record of predicting inflation on its way up is rather weak, the ECB will want to be entirely sure before engaging in more aggressive rate cuts."
A weaker outlook for euro zone growth will eventually prompt the ECB to cut more sharply, he said.
"Given that the ECB's forecasts have been structurally overestimating the timing and the strength of the eurozone economy, it only seems to be a matter of time before a bleaker growth outlook will translate into more aggressive rate cuts," Brzeski said.
ECB President Christine Lagarde on Thursday said that "risks to economic growth remain tilted to the downside." A pullback of demand for euro areas exports, continued geopolitical risks, and bigger than expected lagged impacts from tighter monetary policy are factors that could weigh on growth, she noted.
— Sophie Kiderlin
Euro rises against U.S. dollar after comments from ECB's Lagarde
The euro traded higher against the U.S. dollar after the European Central Bank announced its decision to cut interest rates and ECB President Christine Lagarde gave a post-decision press conference.
The euro was up around 0.21% to $1.103 as of 3:00 p.m. London time.
— Sophie Kiderlin
Services inflation will decline over the course of 2025, ECB's Lagarde says
Services inflation is set to decline across 2025, European Central Bank President Christine Lagarde said in a press conference on Thursday. Among other factors, this projection is linked to expectations that wage growth will ease, she explained.
While other components of inflation were easing, services was increasing, she noted. The latest euro area inflation print showed that services inflation came in at 4.2% in August, above the previous month's 4% print.
Lagarde on Thursday attributed this to factors including holiday packages and insurance.
Services inflation was "clearly the component of prices that requires very attentive understanding," and "monitoring," she said.
— Sophie Kiderlin
Decision to cut rates by 25 basis points was 'unanimous,' ECB's Lagarde says
The European Central Bank's decision to cut interest rates by 25 basis points was "unanimous," its President Christine Lagarde said Thursday in the post-meeting press conference.
"We thought that given that gradual disinflationary process it was perfectly appropriate to moderate the degree of monetary policy restriction," she said.
Lagarde also described the decision as "perfectly legitimate," and said it was made based on a review of incoming data, analysis from ECB staff and the consistency of projections.
The September inflation projections were "virtually unchanged" from those in June, she said, noting that inflation was still expected to return to the 2% target rate in 2025.
— Sophie Kiderlin
ECB President Christine Lagarde's speech
Read European Central Bank President Christine Lagarde's full speech about the latest interest rate decision here.
Euro nudges higher against U.S. dollar after ECB rate cut
The euro edged higher against the U.S. dollar, shortly after the European Central Bank cut interest rates by 25 basis points.
As of 1:53 p.m. London time on Thursday, the euro traded at around $1.102, up around 0.1% and extending gains from earlier in the session.
— Sam Meredith
ECB likely to next cut rates in December, economist says
The European Central Bank is likely to next cut interest rates in December, and traders "should not expect three rate cuts into the end of the year," Daniel Lacalle, chief economist at Tressis, told CNBC on Thursday.
"If they actually implemented three rate cuts into December I would be very worried," he added. That amount of rate cuts would signal that chances of a recession are closer to 70 or 80%, he explained.
Lacalle said he expects the ECB to be "prudent" when it comes to rate cuts because Tressis' estimates show that the likelihood of a recession is "exceedingly low."
— Sophie Kiderlin
ECB says it is 'not pre-committing to a particular rate path' after September cut
The European Central Bank said it would not pre-commit to a particular interest rate path over the coming months, even as investors priced in further monetary policy easing through to the end of the year.
"The Governing Council will continue to follow a data-dependent and meeting-by-meeting approach to determining the appropriate level and duration of restriction," the ECB said in a written statement.
"In particular, its interest rate decisions will be based on its assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission. The Governing Council is not pre-committing to a particular rate path," it added.
Economists are split over whether policymakers at the ECB will look to pause when they meet again on Oct. 17, before potentially reducing rates by another quarter-point on Dec. 12.
— Sam Meredith
ECB delivers quarter-point interest rate cut
The European Central Bank reduced interest rates by 25 basis points on Thursday, resuming a rate-cutting cycle that started with a landmark move in June.
The ECB's key interest rate — which helps to price all sorts of loans and mortgages across the bloc — now stands at 3.5%, down from 3.75%.
Market participants will look to scrutinize comments from ECB President Christine Lagarde on the pace and extent of further moves when a scheduled press conference kicks off at 1:45 p.m. London time.
— Sam Meredith
Euro edges higher against U.S. dollar ahead of ECB rate decision
The euro traded marginally higher against the U.S. dollar by midday on Thursday, shortly before an expected interest rate cut from the European Central Bank.
As of 12:50 p.m. London time, the euro hovered at around $1.102, up around 0.05% from the previous session.
— Sam Meredith
What to watch out for during ECB President Christine Lagarde's press conference
Economists at Nomura expect questions during the European Central Bank's press conference to focus on the path for interest rates beyond September, as well as the risk of a faster rate-cutting cycle from the Federal Reserve.
In a research note published on Sept. 4, economists led by Nomura's Andrzej Szczepaniak said they expect the ECB to reduce its deposit rate by 25 basis points to 3.5% on Thursday.
At the central bank's press conference at 1:45 p.m. London time, Nomura said ECB President Christine Lagarde is likely to face questions about the shift toward adverse growth concerns amid issues such as Germany's struggling economy.
"Lagarde is likely to underscore data dependency and taking a meeting-by-meeting approach, as well as emphasising the ECB's independence from the Fed," the economists wrote in a note.
"We believe … Lagarde will likely stress that the ECB can cut rates at meetings between projection rounds should the data warrant it; markets may read this as increasing the likelihood of cuts between forecast meetings, including in October," they added.
— Sam Meredith
European stocks hold gains ahead of ECB meeting
European stocks rallied on Thursday as investors looked ahead to the European Central Bank's monetary policy meeting.
The pan-European Stoxx 600 traded 1.1% higher at around 11 a.m. London time, holding gains from the start of the trading session.
Mining stocks rose nearly 3%, with all sectors trading in positive territory.
— Sam Meredith
A widely expected ECB rate cut in September could be the last of the year, consultancy says
The European Central Bank is widely expected to cut interest rates by 25 basis points on Thursday, although for many investors the bigger question is what will follow in the coming months.
"Two more rate cuts this year makes sense, but if the ECB doesn't cut in October, the data could prevent a second cut in December," economists at Pantheon Macroeconomics, a consultancy, said a in research note published Wednesday.
"A further near-term decline in headline inflation, softness in economic surveys, the beginning of Fed easing, and a slowdown in US employment growth have kept an October rate cut in our forecasts," they added.
"By contrast, our forecast of a sharp rebound in Q4 core inflation has prompted us to pull the December cut. If the ECB stands pat in October, which is currently the market baseline, risks are tilted towards this week's cut being the last for the year."
— Sam Meredith
What to expect from the ECB meeting
Economists and strategists overwhelmingly expect the European Central Bank to deliver a quarter-point interest rate cut on Thursday, with investors poised to scrutinize statements for clues on what could follow over the coming months.
The highly anticipated rate decision is expected at 1:15 p.m. London time, with ECB President Christine Lagarde set to lead a press conference from 1:45 p.m. London time.
Lagarde is seen as likely to stick to central bank's recent narrative that interest rate decisions are data-dependent and taken on a meeting-by-meeting basis.
Market participants will closely monitor any comments that suggest whether the ECB chief is willing to keep the door open for another rate cut as soon as next month.
— Sam Meredith
Investors may be disappointed by a lack of clear forward guidance from the ECB, Saxo Bank says
The European Central Bank is poised to deliver a quarter-point interest rate cut on Thursday, but strategists at Saxo Bank have warned investors that the central bank is unlikely to offer any clear forward guidance.
"The market is widely expecting a 25 basis point cut at Thursday's meeting, and we think the ECB will deliver," Althea Spinozzi, head of fixed income strategy at Saxo Bank, said in a research note published on Sept. 6.
"However, don't expect the ECB to provide any clear forward guidance on what happens next. Policymakers are likely to remain data-dependent, monitoring the inflation and growth outlook closely before making further moves," Spinozzi said.
— Sam Meredith
Euro mixed against U.S. dollar ahead of ECB rate decision
The euro traded mixed against the U.S. dollar ahead of the European Central Bank's monetary policy meeting.
As of 9:00 a.m. London time on Thursday morning, the euro hovered at around $1.1, little changed from the previous session.
— Sam Meredith
Central banks are entering a cutting phase — and it could lead to further market upside, strategist says
A change of phase in the monetary fabric that underpins the global economy is set to get underway, according to one strategist, and it could spur further market upside.
"We're entering a cutting phase," John Bilton, global head of multi-asset strategy at J.P. Morgan Asset Management, told CNBC's "Squawk Box Europe" on Thursday.
"We're going to see that probably today from the ECB, chances are with 25 [basis points], likely on the 18th next week with 25 [basis points] from the Fed, the Bank of England likely getting in on the party after what we saw in the data yesterday," he continued.
"So, all in all, we have all the ingredients for the beginning of a fairly extended cutting cycle but one that is probably not associated with a recession — and that's an unusual set-up," Bilton said.
"It means that we get a lot of volatility to my mind in terms of price discovery around those who believe that actually the Fed [is] late, the ECB [is] late, this is a recession and those, like me, that believe that we don't have the imbalances in the economy, and this will actually spur further upside."
— Sam Meredith
Mizuho International says ECB to cut interest rates in each of its last three meetings of the year
Strategists at Mizuho International expect the European Central Bank to cut interest rates by 25 basis points on Thursday, reducing the deposit rate to 3.5% from 3.75%, followed by two further rate cuts before year-end.
Evelyne Gomez-Liechti, a rates strategist at Mizuho International, said in a research note that markets are split between 50 basis points or 75 basis points of cuts from the ECB through to the end of 2024. A basis point is 0.01 percentage point.
"September and December are fully priced. Our base case is for the ECB to cut in the last three meetings of the year, and we think there is room for the October meeting to be priced more evenly, making receiving positions still attractive," Gomez-Liechti said.
Separately, economists at Berenberg Bank have said they expect the ECB to pause when policymakers meet on Oct. 17, before reducing rates by another quarter-point on Dec. 12.
— Sam Meredith
European markets open sharply higher ahead of ECB rate decision
European markets opened sharply higher on Thursday, as investors keenly await the European Central Bank's monetary policy meeting.
The pan-European Stoxx 600 traded up more than 1.1% higher shortly after the opening bell, with all sectors in positive territory.
— Sam Meredith
ECB wary of 'many risks' surrounding the growth outlook, economist says
The European Central Bank will be wary of a flurry of risks surrounding the growth outlook, one economist at S&P Global Ratings said on Thursday, including shipping costs, energy policy and international trade.
"They have many risks surrounding the outlook," Sylvain Broyer, chief economist for EMEA at S&P Global Ratings, told CNBC's "Squawk Box Europe" on Thursday.
"The ECB is focused on what is happening on the labor market because right now the labor market is still tight, so that service inflation has reaccelerated over the summer, and this is because labor costs are not easing as quickly as many were expecting," Broyer said.
"It's really a balancing act for the ECB to focus on the labor market, on the one side, the inflation risks associated with a tight labor market but, on the other side, the risk of a reversal and then much weaker growth if labor costs become the problem for employers," he added.
— Sam Meredith
Goldman economist says an ECB rate cut is the easy bit — the harder part is what comes next
The European Central Bank is poised to deliver a quarter-point rate cut on Thursday, according to an economist at Goldman Sachs, but guiding the market on what to expect over the coming months is likely to be a tougher challenge.
"I think the first part of the meeting, if you like, is relatively straightforward. They will cut [by] 25 basis points. They will probably just make small changes to the projections, and they will say we are data dependent, we go meeting by meeting. I think that's the easy part," Jari Stehn, chief European economist at Goldman Sachs, told CNBC's "Squawk Box Europe" on Thursday.
"The harder part, I think, is going to be in the press conference to guide the market in terms of what the timing is of that next rate reduction. And here, we think [ECB President Christine Lagarde] will leave relatively open."
Stehn said he expects the ECB to downwardly revise its near-term growth projections, "but I think they will hold on to the broad narrative of a recovery going on in Europe."
— Sam Meredith
UBS CEO urges ECB to take a cautious approach, suggests a 'moderate' interest 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 ahead of the ECB's highly anticipated meeting on Thursday, with analysts suggesting that the most likely outcome is for policymakers at the central bank to deliver a quarter-point rate cut.
When asked for his views on the appropriate course of action for the ECB, Ermotti replied, "I guess a moderate cut."
"There is room for the ECB and, in general, the central banks as I said before to maybe to do some cuts, but the scope and size of those cuts have to be coherent with the first mandate, [which] is the fight of inflation and eventually [to] stimulate the economy," Ermotti told CNBC's "Squawk Box Asia."
The ECB, which sets monetary policy for the 20 nations that share the euro, held interest rates steady at 3.75% in July.
— Sam Meredith
ECB likely to reduce rates in September — but no further cuts expected this year, economist says
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 it is broad consensus not only among economists but also in the [ECB's governing] council that there will be a rate cut of 25 basis points. The big question is what signals will be sent," Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, told CNBC's "Squawk Box Europe" on Wednesday.
"It is a tricky situation because you have this core inflation which will go up in September, according to our inflation [forecast], to 3.2%. You have also the view of Philip Lane, the chief economist of the ECB, that wage increases will be higher over the second half of this year."
Hamburg Commercial Bank's De la Rubia said he was "quite skeptical" further interest rate reductions would follow a September cut.
"It is an environment where it is difficult to argue, 'OK, now let's move on with further steps.' So, I think they will stick to their meeting-to-meeting approach and be quite cautious," De la Rubia said.
— Sam Meredith
ECB set to cut interest rates just days before the Fed’s big decision
The European Central Bank on Thursday is set to cut rates again by 25 basis points just days ahead of the U.S. Federal Reserve beginning its own rate-cutting cycle.
Traders are widely anticipating an interest rate cut at the Federal Reserve's Sept. 17-18 meeting, as well as at the ECB's meeting this week.
In July, the ECB left interest rates unchanged in a unanimous vote following June's landmark cut. At the time it described the potential for a September reduction as "wide open."
The ECB's key interest rate — which helps to price all sorts of loans and mortgages across the bloc — is currently at 3.75% after years of aggressive hikes.
— Annette Weisbach
