ECB doesn’t need to wait for the Fed

The ECB’s new operational framework, announced this week, doesn’t change the near-term outlook for monetary policy: we still expect the Bank to start cutting interest rates in June. And even though some commentators suggest that the ECB will have to wait for the Fed to move first, that forecast won’t necessarily change even if it looks like the Fed will keep policy on hold for longer. Next week, we expect Norges Bank to signal that it will start cutting rates sooner than it had previously suggested, and we think there is a good chance that the Swiss National Bank will cut its policy rate by 25bp to 1.5%.