June 2024 ECB Post-Mortem: who’s in charge?

Summary

• Let’s do the nuts and bolts of the June ECBmeeting first before discussing the press conference, which was a bit of a mess(is Lagarde even in charge?):

• As per the ECB’s own guidance, market andanalyst expectations, the ECB cut all three rates by 25bps (deposit rate to3.75 percent; main refinancing rate to 4.25 percent; marginal lending rate to4.50 percent). Effective per the next maintenance period starting on June12. No other monetary policy/technical changes;

• Rate cut was unanimous except for onedissenter, which was highly likely Austrian central bank governor and arch-hawkHolzmann (Holzmann later confirmed he dissented);

• No clear signal if today’s cut is a‘one-and-done’, or if the ECB will cut at regular intervals in the second halfof the year or early 2025. Policy will have to remain restrictiveregardless;

• ECB staff forecasts for headline inflation,core inflation and GDP were all increased. Most important changes were realGDP for 2024 to 0.9 percent from 0.6 percent; core inflation for 2024 to 2.8percent from 2.6 percent; core inflation for 2025 to 2.2 percent from 2.1percent; headline inflation for 2024 to 2.5 percent from 2.3 percent. Fullforecasts here;

• Upgrade of the economic assessment. Fromrisks are tilted to the downside to balanced risks in the near-term but titledto the downside in the medium term. More downbeat on inflation, which is nowlikely to stay elevated well into next year;

• With the mundane stuff out of the way, let’sdiscuss today’s meeting. In particular, the press conference.

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