The European Central Bank (ECB) and the Bank of Canada (BoC) have been forecast to lower their benchmark rates in the coming days. As per the announcement, borrowers in the eurozone and in Canada are expected to get some relief from high interest rates this week.

The ECB will set its policy, with the money markets indicating rate cuts are a 93% chance. It is likely to lower the rate on its deposit facility, which banks can use to make overnight deposits with the Eurosystem, to 3.75%, down from its current record high of 4%. Furthermore, according to a report by the Guardian, there is an 82% chance that the Bank of Canada (BoC) will cut borrowing costs on June 5, 2024, from 5% to 4.75%, market pricing indicates.

These odds rose after Canada’s GDP grew more slowly than forecast in the first three months of this year, 2024. This would put the ECB and BoC among the first of the big central banks to ease policy in the current cycle, following the Swiss National Bank, which cut its rates in March 2024. However, the future path of interest rates remains unclear, given signs that inflation could be more persistent.

Inflation in Europe and Canada in 2024 In May 2024, data showed that eurozone inflation increased to 2.6%, deviating from the ECB’s 2% forecast but significantly lower than the 6.1% recorded the previous year in 2023. This rise may prompt the ECB to be cautious about aggressive rate cuts, though several reductions are anticipated over the next 18 months. Meanwhile, Canada’s annual inflation rate dropped to 2.7% in April 2024, down from 2.9% in March 2024.

This decline could allow the Bank of Canada to ease policy in the coming week. In the UK, inflation fell to 2.3% in April 2024. Despite this decrease, the Bank of England is not expected to cut interest rates later this month.

According to the Guardian, the first cut is not expected until November or December of 2024. .