European Central Bank Rate Cut Expectations
LONDON (Reuters) – Major brokerages, including Goldman Sachs and JPMorgan, now expect the European Central Bank (ECB) to deliver a quarter-point cut at its Oct. 17 meeting, revising their forecasts on Friday due to recent data showing economic weakness and slowing inflation.
Market pricing now reflects around a 70% chance of such a rate cut, which would follow reductions at the ECB’s June and September meetings, as the data pushes policymakers to focus more on growth and less on price pressures.
Eurozone business activity contracted sharply and unexpectedly in September, according to surveys, with the bloc’s dominant services industry flatlining and a downturn in manufacturing accelerating. Additionally, inflation in France and Spain for September appeared notably soft.
Sources indicated to Reuters that ECB policy doves are preparing to advocate for an October rate cut; however, this might encounter resistance from more conservative colleagues. This marks a turnaround from perspectives after the ECB’s September meeting when an October move was seen as unlikely.
Latest Forecasts from Brokerages
| Brokerage | Oct ’24 rate (bps) | Dec ’24 rate/end ’25 estimate (bps) |
|---|---|---|
| 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 | 2.00% (June 2025) |
| TD Securities | 25 | 2.50% (March 2025) |
| Jefferies | 25 | Close to 2.00% (end 2025) |
| Deutsche Bank | – | 2.0%-2.5% (mid-2025) |
| Citi | – | Likely under 2% |
| UBS IB | – | 2.25% (end-2025 forecast) |
| ING | – | 2.25% (end 2025 forecast) |
| BBVA | – | 2.75% (November 2025) |
| SEB | – | 2.00% (end 2025) |
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