Markets
The ECB cut its deposit rate by 25 bps to 3.5% while narrowing the gap between the deposit rate and the main refinancing rate from 50 bps to 15 bps as flagged in March. New growth and inflation forecasts barely changed from June. The ECB plots the same 2.5%-2.2%-1.9% average inflation path for the 2024-2026 period while marginally downwardly revising the now 0.8%-1.3%-1.5% growth trajectory for the same period. ECB Lagarde offered no guidance for the remaining two policy meetings, but a simple copy-paste from Q3 suggests skipping the October meeting to reduce key rates by 25 bps again when new growth/inflation forecasts are available. The short, 5-week, intermeeting period to October 17 provides the ECB with only one additional PMI survey and CPI report. The ECB president also acknowledged that inflation dynamics would accelerate going into year-end because of energy-related base effects (huge drops in energy prices in Q4…
