The euro-zone data do not scream “rate cut” – the economy is growing at a steady pace and domestic inflation has stabilised at a high level. But we suspect that most ECB policymakers will judge that a cut is justified next month, and recent concerns about the US strengthen their case. Beyond September, assuming the euro-zone economy continues to expand and the US avoids a hard landing, further cuts will require evidence of easing underlying price pressures.
Elsewhere, we think that the Riksbank will reduce its policy rate later this month, and recent moves in inflation and the franc have increased the chance that the SNB will cut again in September. Norges Bank will probably hold fire until December.
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