ECB Interest Rate Predictions
(Reuters) – Major brokerages, including Bank of America, Goldman Sachs, and Citigroup, expect the European Central Bank (ECB) to cut interest rates by 25 basis points at its first meeting of 2025 on January 30 due to slowing inflation.
Forecasters anticipate further cuts throughout 2025, predicting the ECB's benchmark rate will decline below the neutral range of 2%-2.5%, which neither stimulates nor restricts economic activity.
Currently, money markets indicate that traders foresee eurozone rates dropping to about 1.85% by the end of 2025, down from the present 3%.
Recent data show eurozone business activity declined significantly in November, with the PMI indicating that the services sector is now contracting alongside manufacturing.
Inflation in the eurozone slightly increased to 2.3% in November, up from 2.0% in October. The ECB now forecasts inflation to reach 2.1% next year and 1.9% in 2026, aligning closely with its 2% target.
Brokerage Rate Cut Forecasts:
| Brokerage | Jan'25 Rate Cut (bps) | 2025 Terminal Rate Forecast (bps) | End Forecast |
|---|---|---|---|
| BofA Global | 25 | 150 | 1.50% (Sept 2025) |
| Goldman Sachs | 25 | 125 | 1.75% (July 2025) |
| ING | 25 | 125 | 1.75% (July 2025) |
| J.P. Morgan | 25 | 125 | 1.75% |
| Citigroup | 25 | 150 | 1.50% |
| Barclays | 25 | 150 | 1.50% |
| Morgan Stanley | 25 | – | 1% (2026) |
| Deutsche Bank | 25 | 150 | 1.50% |
| Societe Generale | 25 | – | N/A |
| Wells Fargo | 25 | 125 | 1.75% |
| Nomura | 25 | 125 | 1.75% (Sept 2025) |
| Peel Hunt | 25 | 100 | 2.00% |
| UBS | 25 | 100 | 2.00% (June 2025) |
Comments (0)