ECB seen cutting rates next week and then again in December – poll

The poll shows that 64 of 77 economists (~85%) predict the ECB will cut rates by 25 bps at next week’s meeting and then again in December. Four other respondents expect just one 25 bps rate cut for the remainder of the year while eight are seeing three rate cuts in each remaining meeting.

In the August poll, 66 of 81 economists (~81%) saw two more rate cuts for the year. So, it’s not too major a change up in views.

For some context, the ECB will meet next week and then again on 17 October before the final meeting of the year on 12 December.

Looking at market pricing, traders have more or less fully priced in a 25 bps rate cut for next week (~99%). As for the remainder of the year, they are seeing ~60 bps of rate cuts at the moment. Looking further out to the first half of next year, there is ~143 bps worth of rate cuts priced in.

The nearly two-and-a-half rate cuts priced in for the rest of 2024 is going to be an interesting one to keep up with in the months ahead. The ECB seems to be leaning towards a rate cut roughly once in every three months, skipping one meeting. So, that’s what economists are picking up on I guess. For some background: A growing rift at the ECB on the economic outlook?

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