The market is increasingly comfortable with a June ECB rate cut and the door is cracked open to moving in April. Pricing is 99% for June right now and just 8% for April.
Given that there is less than a week until the April 11 decision, that's not a big surprise. Perhaps the better debate is how quickly the ECB continues to cut after June. Right now, July odds are at 59% and that will be a spot to watch.
The latest comes from the Bank of Italy, which is a sign of which way the wind is blowing. Their updated forecast for 2024 HICP inflation is 1.3% compared to 1.9% in December. The 2025 forecast was also lowered to 1.7% compared to 1.8%.
On the growth side, the GDP forecast was unchanged at 0.6% while 2025 inched lower to 1.0% from 1.1%.
If I'm Bank of Italy Governor Fabio Panetta, I'm certainly arguing for rate cuts now rather than later.
