ECB’s Vujčić: Market bets on three rate cuts are not unreasonable

• Don’t see a recession right now, sees a gradual recovery
• Expects inflation, including services, to come down
• Already have wage moderation, expect that to continue
• March and April will be key for a clearer picture on rate path
• Tariff threats are a great source of uncertainty
• But US tariffs won’t immediately trigger a 50 bps rate cut

March is already a given, so I would take it that he means the two more rate cuts after that are a fair assessment. As things stand, traders are pricing in ~84 bps of rate cuts for the year – including March. That fits with the current balance of risks in play. But if Trump were to go hard on his tariffs threat, I reckon we could see markets price in further downside on rates; even if it might just be a kneejerk reaction.

This article was written by Justin Low at www.forexlive.com.