Deutsche Bank economists said that amid further signs of deterioration in the eurozone's economic outlook, they now forecast more active monetary policy easing by the European Central Bank
"Given recent events, we now predict that the ECB will cut interest rates by 0.25% at each meeting starting in December," Deutsche Bank said, reviewing its previous forecast, which called for quarterly interest rate cuts until the end of 2025
"The ECB is likely to accelerate the pace of monetary policy easing, and to reach the terminal rate of 2.00-2.50% six months earlier in mid-2025. Most likely, the Central Bank will cut rates by 0.25%, but we do not rule out monetary policy easing by 0.5% at the December ECB meeting," Deutsche Bank economists added.
Yesterday, HSBC economists said it now expects the ECB to cut interest rates by 0.25% at every meeting from October through to April next year, bringing the deposit rate to 2.25%. Previously, they predicted cuts every other meeting until the key deposit rate hit 2.50% in September 2025.
According to various estimates that include the ECB's own, ECB has five, maybe six 25-basis-point cuts until it reaches a "neutral" interest rate level at around 2.0% or 2.25%. However, money markets now see an 80% likelihood of the ECB lowering its deposit rate by 0.25% in October, compared to a 50% chance on Monday. Markets are pricing in about 0,5% of rate cuts in total by the year-end.