Caixin reported on August 23 (Editor Xia Junxiong) According to sources cited by the media, European Central Bank policymakers are close to reaching a consensus on rate cuts in September, with the possibility of delaying the rate cut only if significant unexpected data emerges in the coming weeks.

To curb high inflation, the European Central Bank ended its eight-year era of negative interest rates in July 2022 and embarked on the fastest rate-hiking cycle in history, raising interest rates 10 times in a row and cumulatively raising them by 450 basis points.

In June this year, the European Central Bank finally started the rate-cutting cycle, and then held steady at the interest rate meeting in July. Currently, the European interbank offered rate, marginal lending rate, and deposit facility rate are 4.25%, 4.50%, and 3.75% respectively.

Although the financial markets widely expect the European Central Bank to cut rates again next month, policymakers are cautious about the next steps due to criticism of the central bank making too many public commitments before the rate cut in June.

In recent weeks, with the release of several favorable economic data points, many policymakers have started to change their minds and are willing to discuss their views on the next steps, believing that the conditions for a rate cut are being met.

Sources say that European Central Bank decision-makers maintain an open attitude towards another rate cut in September, citing a series of reasons: easing of price pressures as expected, lower-than-expected economic growth, slowing wage growth, and the imminent rate cuts by the Federal Reserve making ECB's work easier.

Informal discussions indicate broad support for a rate cut in September, although most officials are still waiting for further data before they can definitively determine their positions.

European Central Bank decision-makers rarely take formal votes, and most interest rate decisions are made by consensus, which means that if hawkish officials also start to endorse the rate cut in September, this decision is unlikely to be controversial.

The attitude of European Central Bank President Lagarde will be crucial, but she has not yet signaled any decision for September, nor has she made any public comments on the ECB's policy in recent weeks.

Some decision-makers are concerned that a rate cut in September could trigger expectations for further rate cuts in October, and they hope to ease investor bets to align market pricing with quarterly rate cuts.

Markets currently believe that the probability of a rate cut in September is over 90%, and it is expected that there will be at least one more rate cut for the rest of this year, followed by a gradual decline in rates until 2025.

Policymakers believe that inflation pressures are easing, and interest rates will remain high enough to restrict economic growth, so the rate cut in September is only a proper easing of the brakes.

On the other hand, officials are also concerned about weak economic growth, and they need to ensure that interest rates do not excessively suppress economic growth, as a soft landing is not guaranteed.