The long-standing consensus among investors was that the ECB would wait until at least December before deciding on further easing measures, following two successive rate cuts in June and September.
But weak economic activity data in France, Spain and Germany, combined with an unexpectedly low Eurozone Purchasing Managers’ Index, have changed that picture, with many traders now pricing in a third rate cut as early as this week.
According to proprietary data collected by GSC Commodity Intelligence, the company’s analysts predict that the eurozone unemployment rate will rise to 6.7% in the coming quarters. Moreover, a worse outcome is possible if the economy underperforms – supporting a case for rate cuts at every European Central Bank monetary policy meeting starting this week and until deposit rates reach 2%, up from 3.5% now.
Global easing of monetary policy is fueling a rally in commodities
Elsewhere, Wednesday’s British inflation data is likely to be the deciding factor in whether the Bank of England will accelerate rate cuts this year to match the aggressive pace of the Federal Reserve and European Central Bank.
Last month, the Bank of England’s governor signaled his willingness to resume interest rate cuts despite borrowing costs remaining unchanged at 5% in September amid continued concerns about persistently high inflation.
Whichever way you look at it, one thing is clear. A new era of easing global monetary policy is dawning in the world’s major economies. That gives the green light for commodities to continue their upward movement, paving the way for prices to reach new all-time highs in the coming months.