The ECB might lead the pivot to rate cuts
Markets are convinced that central banks will pivot to interest-rate cuts next year. Who will lower rates first – the Bank of England, the Federal Reserve, or the European Central Bank?
This visualisation tracks the evolution of futures markets to show when a quarter-point cut from the terminal rate has been priced in. This month, the ECB has taken the lead in the pivot race: its first cut is expected in April, compared with May for the Fed and July for the BoE. (Our next chart discusses the ECB comments that might have prompted this, and explores the effect on German bond yields.)
The three lines have moved in unison since the summer – showing how the pivot is expected earlier in 2024 than previously assumed.