The European Central Bank’s announcement of the first interest rate cut since 2019 has garnered significant attention since Thursday.
The cut was anticipated and welcomed by numerous sectors, particularly the real estate industry, as it implies slightly improved accessibility to mortgages.
Asked about these projections in an interview with our colleagues from RTL Radio on Friday morning, William Telkes, Spuerkeess’ chief economist, said he shared “part” of these forecasts. “I fully agree that two more cuts are feasible this year. As far as next year is concerned, I’m a little more cautious,” Telkes stated.
Telkes emphasised the unpredictability of the international context and noted the influence of the Federal Reserve (Fed) in the US on European markets.
Regarding the timing of the next cut, slated for 2024, Telkes mentioned September as the anticipated “window” according to market sentiment.
Telkes highlighted the significance of wage trends in determining the timing of interest rate cuts. He added that if signs of weakness emerge, the anticipated window for rate cuts in September could be relied upon.
Regarding current rates, Telkes noted a time lag between ECB announcements and actual rate cuts. “What was decided yesterday will only be applied from 12 June. We’ll then have to see what the banks do,” he stated.
Despite this, there is positive news as fixed rates have already begun to decline since the end of 2023. Telkes suggested that this downward trend may continue in response to the ECB’s recent announcements.
However, Telkes tempered optimism by stating, “We will not reach pre-crisis rate levels.”
