A Bloomberg survey of analysts predicts the key benchmark rate will reach 2.25% in December 2025
The European Central Bank is now likely to cut its deposit rate once a quarter until the end of next year, a timetable that will see the end of the easing cycle sooner than previously expected, according to economists.
A Bloomberg survey of analysts predicts that benchmark rate will reach 2.25% in December 2025, after six consecutive quarterly cuts. Previously, respondents predicted that such a level would only be reached in the second quarter of 2026.
Inflation
The ECB began cutting borrowing costs in June amid increased confidence that inflation will return to its 2% target in time. Officials have left little doubt that more rate cuts will follow, though they have declined to commit to a specific timeline, citing the uncertain economic environment.
Persistent wage pressures fueling domestic inflation left some officials at the ECB's last Governing Council meeting wondering whether there is room for another step this year. Since then, the outlook has worsened, supporting those who advocate faster cuts.
Eurozone private sector growth stalled in July and Germany remains a drag on the rest of the region. Economists in the survey cut their forecasts for Europe's largest economy and see an expansion of just 0.1% this year.
What Stournaras said
Two further interest rate cuts by the European Central Bank are possible in 2024, according to recent statements by the governor of the Bank of Greece and member of the ECB Governing Council, Yannis Stournara.
“I still expect two interest rate cuts this year, if deflation continues as expected,” he said in the Platow interview, adding that “We are on the right track. Growth is weaker than expected, which also argues in favor of lowering interest rates.”
