Euro's Strength Unlikely to Prompt ECB Rate Cut, Analysts Say

Evercore ISI analysts have indicated that the recent appreciation of the euro is insufficient to compel the European Central Bank (ECB) to reconsider a rate cut. According to Jin10, the analysts noted that a significant decline in inflation expectations, driven by weakening demand, would be necessary for such a move. They suggested that the euro would need to rise to 1.25 against the dollar to exert enough pressure for the ECB to consider a rate cut. The analysts predict that the ECB is likely to maintain its current interest rates throughout the year. However, they noted that the risks are skewed more towards a rate cut rather than a hike. In the event of excessive euro strength, the ECB might opt for a single rate cut, and if broader pressures from declining inflation are also present, the central bank could potentially implement two rate cuts.