Europe x Canada Rate Cuts

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Koushik Korampalli

June 9, 2024

Written by Koushik Korampalli

Est read: 0 minutes

Canada was the first G7 Central Bank to cut rates this cycle
- They cut rates by 0.25% to 4.75% on Wednesday
- Rates have been at 5% since July 2023
Most forecasters predict 3 more BoC rate cuts this year
Following this the European Central Bank cut rates by 0.25% on Thursday
- The current rate now sits at 3.75%
- This is the first cut in 5 years
Christine Lagarde, President of the ECB, said she was not fully committed to continue cutting rates, forecasting that inflation would still stay above 2% until Q42026
- Forecasts show that in 2024 inflation would average 2.5%
- In 2025 it would be 2.2% and 1.9% in 2026
Inflation has fallen more than 2.5% since the last rate hike in September of last year
- However, in May inflation rose to 2.6% from 2.4% in April
European stocks rose in anticipation of the rate cut and rose higher following the announcement
- Stoxx 600 +0.7%
- Cac 40 +0.4%
- Dax +0.4%
- FTSE 100 +0.5%
Looking at other countries, traders are betting on rate cuts in September for both the UK and US