On Friday, the twelve-month Euribor rate reached its highest level in almost a month, signaling potential changes in the European Central Bank’s (ECB) policy rates. The Euribor was quoted at 3.729% on Friday, up from 3.702% on Thursday, marking its highest level since the end of April.
The ECB is widely expected to begin interest rate cuts at its meeting on June 6. However, economists have tempered their predictions for further cuts due to uncertainty around the bank’s future policy moves. Danske Bank has revised its forecast for the ECB’s interest rate cuts and now predicts only two cuts this year – in June and December – with a deposit rate of 3.5% by the end of the year. This is down from their previous prediction of three cuts for the year.
Nordea expects that the central bank will lower its interest rate by around 0.60 percentage points this year through three cuts of 0.25 percentage points each in the central bank interest rate this year. Interest rate derivatives suggest similar expectations, indicating that investors are preparing for a significant shift in monetary policy from the ECB.
Overall, these developments indicate that there may be some uncertainty around future interest rate policies from the ECB, but it is still seen as an indicator of potential changes in monetary policy rates across Europe.
It should be noted that while these indicators are important, they are not definitive and subject to change based on various factors such as economic conditions and political developments in Europe and beyond.
