ECB set to cut rates again as global easing momentum builds

The European Central Bank is likely to cut interest rates Thursday, in a precursor to a US move the following week, as the global monetary cycle tips toward more uniform easing.

Eurozone officials have indicated they will deliver a second cut in borrowing costs, following up on July's move, which will be watched by investors for any hint of what policymakers may plan beyond that for the second half of this year. At least one more cut is likely in 2024.

With the Bank of Canada's rate move on Sept. 4, timing just days before the Federal Reserve's first cut expected Sept. 18, underlines how large advanced economies are moving in lockstep as officials pivot to supporting economic growth now they have judged that the risk of inflation has faded.

In the eurozone, easing in a key measure of wage growth during the second quarter will have helped to embolden policymakers.

On Wednesday, a US consumer-price report may likewise reassure Fed officials that inflation pressures are stabilising, just after data on Friday showed US hiring was below forecasts.

For investors, the question overhanging this month's meetings is the degree to which such rate cuts herald a deeper easing cycle that might not only remove constriction from major economies but also start to stimulate them.

Prospects for growth will be in focus when ECB President Christine Lagarde addresses journalists on Thursday, not least in light of just-released data showing that second-quarter expansion was weaker than initially reported.

Governing Council officials are believed to favour making rate moves at meetings such as the upcoming one when they have newly compiled quarterly forecasts in hand. That would leave them more likely to make a further reduction in December than at their next meeting, Oct. 17.