European Central Bank Rate Cut Expectations
LONDON (Reuters) – Major brokerages, including Goldman Sachs and JPMorgan, now expect the European Central Bank (ECB) to implement a quarter-point cut at its meeting on October 17. This change follows recent data indicating economic weakness and slowing inflation, prompting a revision of forecasts.
Market indicators now show an approximately 80% likelihood of the rate cut, which follows similar reductions made by the ECB in June and September. Policymakers are shifting focus towards fostering growth rather than prioritizing price pressure considerations.
Recent surveys revealed a significant and unexpected contraction in Euro zone business activity in September, with the services sector stagnating and a manufacturing downturn accelerating. Additionally, inflation rates in France and Spain for September were noticeably low.
Sources indicated that ECB policy doves are advocating for an October rate cut, although they might encounter resistance from more conservative members. This is a notable shift from the sentiment after the ECB’s September meeting, where an October cut seemed improbable.
Latest Forecasts from Brokerages
| Brokerage | Rate Cut Estimate (bps) | Terminal Rate Forecast (Dec ’25) |
|---|---|---|
| Goldman Sachs | 25 | 2.0% (June 2025) |
| HSBC | 25 | 2.25% (April 2025) |
| BNP Paribas | 25 | 2.25% (end-2025 forecast) |
| RBC | 25 | 2.25% (April 2025) |
| JPMorgan | 25 | 2.0% (June 2025) |
| Barclays | 25 | 2.0%-2.5% (mid-2025) |
| Deutsche Bank | 25 | 2.0%-2.5% |
| Citi | 25 | likely under 2% |
| UBS IB | 25 | 2.25% (end-2025 forecast) |
| ING | 25 | 2.25% (end 2025 forecast) |
| BBVA | 25 | 2.75% (November 2025) |
| SEB | 25 | 2.00% (end 2025) |
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