The European Central Bank is widely expected to keep interest rates at current levels on Thursday, a stance that could be extended for months and even years, according to those following the public lender.

An economists’ poll predicted the bank will leave its main interest rates unchanged, which would keep the deposit rate at 2.00% and the main refinancing rate at 2.15%. The bank’s 25-basis point reduction in early June represented its seventh straight rate cut, a downward move that was likely its last in this cycle, a growing number of analysts have predicted. 

Inflation, the ECB’s key trigger for policy changes, ticked up a tenth in August to 2.1%, leaving it just above the bank’s medium-term target of 2.0%. The core rate held at 2.3% last month, also not enough for rate action, according to analysts. In short, the pressure to cut due to consumer price growth has all but evaporated. (LS – Continue Reading) 

UK estate agents are reporting the most widespread decline in rental properties since the pandemic as the prospect of higher taxes and tighter regulation prompts landlords to exit the market, a closely watched survey found.

The Royal Institution of Chartered Surveyors said its gauge of lettings coming to market plunged to minus 37 in August, the worst reading since April 2020 when the economy was brought to a standstill by Covid. Rents are forecast to increase another 3% over the next year as tenants compete for a dwindling supply of homes. (BBG – Continue Reading) 

Expectations of a 25bp cut at next week’s Federal Reserve meeting have become well entrenched, but a stickier-than-anticipated inflation print on Thursday would likely temper speculation of a more expansive move.

The latest analysts' poll forecasts headline CPI to rise 0.3% m/m in August, up from 0.2% in July. Core CPI, which excludes food and energy, is expected to increase 0.3% for a second consecutive month. On an annual basis, headline inflation is expected to accelerate by two-tenths to 2.9%, while core inflation is forecast to remain at 3.1%. 

Analysts had anticipated that the effects of President Trump’s trade war would only really become apparent from September or October time, but some now suggest signs could already emerge in the August data. A key signal of increasing tariff headwinds is in core goods prices, which rose 0.209% in July after a 0.198% increase in June. (LS – Continue Reading)