[ad_1]
Economists predict that the euro interbank offered rate will fall to 3.2% to 3.25% by the end of this year.
SEB economist Mihkel Nestor said the size of Euribor depends on further decisions of the ECB, which in turn depends on the economic situation, the level of inflation in the euro area and the performance of the labor market.
“The main point today is that the ECB will cut rates two more times this year. As a result, the central bank’s deposit rate is expected to be 3.25%, which will also be close to the short-term Euribor rate,” Nestor said.
Tõnu Mertsina, chief economist at Swedbank, said the central bank is expected to cut interest rates twice, totaling 0.5 percentage points, bringing the deposit rate to 3.25%.
Commenting on the financial markets’ forecasts, LHV macro analyst Triinu Tapver said: “In my opinion, the financial markets’ expectations that Euribor will reach 2.9% by the end of the year are too optimistic. At the beginning of the year, it was actually easy to see that the financial markets were more optimistic than the actual performance of Euribor.”
According to Tapver, the euro interbank offered rate (euribor) is more like 3.2%.
“As inflation, i.e. price growth and wage growth, remains strong and there are no clear signs of weakening in the European economy at the moment, it is unlikely that the euro interbank offered rate will fall sharply/… gradually,” he said.
Tapver said that the main factor affecting the increase in Euribor is permanent price increases, and another important factor is the increase in service prices. “The continued increase in wages and the continued increase in wage expectations have driven the growth of service prices. At the same time, labor costs have become more expensive, which in turn is reflected in the prices of services and goods,” he pointed out.
Tapver said the third component of price growth was the continued high prices of foreign raw materials such as oil, metals and energy.
Economists predict that Euribor will also fall next year
“Based on the current situation, interest rates should continue to fall, so that by the end of next year the market rate could be down to just over 2%,” said SEB economist Mihkel Nestor.
Tõnu Mertsina, chief economist at Swedbank, said there should be five rate cuts over the next year to reach 2%. He said the six-month Eurointerbank offered rate should also be close to these rates.
LHV macro analyst Triinu Tapver said that due to the slowdown in price growth, the ECB is approaching its 2% price growth target. However, he believes that the process will be tortuous: prices will rise and fall at the same time according to the rhythm of price growth.
[ad_2]
Source link
