Italy expects ECB rate cuts in second half of the year

The news: Italy expects the European Central Bank (ECB) to start cutting interest rates from the second half of 2024, the country's economy minister has said.

The numbers: Economists widely expect the ECB to cut its deposit rate in June, three months earlier than an expected move by the US Federal Reserve, and then twice more this year. The ECB’s deposit rate currently stands at 4%.

The context: Italy’s economy minister Giancarlo Giorgetti told the country’s parliament that the gradual easing of monetary policy, likely to take place starting in the second half of this year, would be a supportive factor, particularly for bank credit flows.

Inflation has fallen more steeply in the eurozone compared to the US, but persistently high oil prices and elevated wage growth could derail the progress to the central bank’s 2% inflation target. ECB President Christine Lagarde stated after the April 11 monetary policy meeting that the central bank is "not Fed-dependent", but further weakening of the euro against the US dollar this year could raise the prospect of more imported inflation.