Deutsche Bank European Central Bank preview – cut this week and plenty more after that

Via Deutsche Bank’s preview of the European Central Bank monetary policy meeting this week:

• ECB to continue to cut rates on January 30, with another 25bp reduction in the policy rate to 2.75%
• expect the main planks of the policy stance to be unchanged from December

DB’s “baseline” forecast on the ECB remains unchanged, expecting the Bank to cut by 25bp at each of the four Governing Council meetings in H1 of 2025:

• January 29 – 30
• March 5 – 6
• April 16 – 17
• June 4 – 5
• policy rate to hit 2% by mid-year

Rate cuts to continue in H2 but at a slower pace, one 25bp cut in both Q3 (September 10 – 11 meeting) and Q4 (December 17 – 18 meeting)

• terminal rate of 1.5% to be hit at year end, will be a touch below neutral

DB’s easings call based on:

• assumption of below-trend growth
• moderately below target inflation
• inflation risks are skewed to the downside

This article was written by Eamonn Sheridan at www.forexlive.com.