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Major brokerages such as Goldman Sachs and JPMorgan have revised their forecasts, now expecting the European Central bank to implement a quarter-point cut at its upcoming meeting on October 17. This change comes in light of recent data indicating economic weakness and slowing Inflation. Market expectations show a 70% probability of a rate cut, following reductions at the ECB’s June and September meetings, with policymakers shifting their focus towards growth rather than price pressures.
Euro zone business activity saw a sharp contraction in September, with surveys revealing a slowdown in the services industry and a worsening downturn in manufacturing. Additionally, Inflation figures for France and Spain in September were lower than expected. Sources suggest that ECB doves are gearing up for a fight to push for an October rate cut, even though more conservative members may resist the move. This marks a reversal from the sentiment post-September meeting, when an October cut seemed unlikely.
Various brokerages have updated their forecasts for ECB rates, with estimates as follows: Goldman Sachs predicts a 25-basis-point cut with rates remaining at 2.0% by June 2025, while HSBC, BNP Paribas, RBC, JPMorgan, Barclays, TD Securities, Jefferies, Deutsche Bank, Citigroup, UBS IB, ING, BBVA, and SEB have also provided their rate forecasts. The image below shows the ECB headquarters in Frankfurt.
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Emma Collins, graduated in Financial Economics from the University of Chicago in the USA in 2016. She has since worked at an asset management firm in New York, where she specializes in investment strategies and portfolio management. Emma has a keen interest in financial analysis and has published several articles in renowned financial journals. Her work focuses on providing actionable insights to investors, and she is known for her forward-thinking approach to managing financial portfolios.
