Overview

• ECB President Christine Lagarde said the central bank is nearing the end of its monetary policy cycle after responding to shocks from the pandemic, Ukraine war and energy crisis.
• The latest rate cut has had limited impact on mortgage costs, with ten-year loan rates holding around 3.5 percent due to their link to long-term German bund yields.
• Inflation’s drop just below the 2 percent target aligns the refinancing rate with the estimated neutral rate, reducing scope for further cuts.
• Housing market sentiment improved in May, but analysts warn that government stimulus measures will be crucial to sustain residential construction.
• Negative real rates are squeezing savers, who are being advised to consider longer-term investments like ETFs to secure better returns.