ECB interest rate cut expectations have been growing in recent days. However, the central bank's chief economist warned on Saturday about too fast an interest rate cut.
Popular the reference interest rate for mortgages, the twelve-month euribor fell below 3.6 percent on Monday, as interest rate cut expectations from the European Central Bank (ECB) have been increasing for a change in recent days.
The one-year Euribor rate was quoted on Monday at 3.570 percent, or 0.066 percentage points lower than on Friday.
The twelve-month euribor has been at its highest this year at 3.654 percent, where it was quoted last Thursday.
The increase in interest rate cut expectations in the market was influenced by the producer price figures for December in the United States. According to figures released on Friday, producer prices unexpectedly fell last month in the United States.
The surprising drop in producer prices increased the market's expectations for interest rate cuts by the central bank Fed and pressured interest rates on government bonds also in the euro area along with the drop in interest rates in the United States, Nordea bank said in its morning review on Monday.
According to the news agency Reuters, after the publication of the figures in the United States, the money market priced the ECB to lower its key interest rates this year by 1.55 percentage points by the end of the year, while before the publication of the figures the market expected a decrease of 1.45 percentage points and on Thursday only a decrease of 1.40 percentage points.
The market has also fully priced in the ECB's first rate cut in April.
of the ECB economists following monetary policy are more cautious in their interest rate cut expectations than money market investors.
In a recent economist survey by the news agency Bloomberg, economists expect that the ECB will make only four 0.25 percentage point reductions in key interest rates this year.
The ECB's influential chief economist Philip Lane warned the Italian newspaper Corriere della Sera in an article published on Saturday in the interview, that too fast a pace of interest rate cuts can accelerate inflation. Already on Friday, he said at the event that interest bills will not be a topic of discussion in the near future.
Governor of the Central Bank of Croatia Boris Vujcic instead, on Thursday, it flashed the possibility of even big one-time interest rate cuts of 0.50 percentage points this year.
of the President of the ECB Christine Lagarde is scheduled to speak at the World Economic Forum in Davos on Wednesday. The speech is the last before the quiet period starting on Thursday, which precedes next week's interest rate meeting on Thursday.
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