From Morningstar.: 2024-10-10 11:17:00

The European Central Bank is expected to cut its key interest rate by 0.25 percentage points to 3.25% at its October meeting. This is due to inflation falling below the target level and comments from ECB president Christine Lagarde and French central bank chief François Villeroy de Galhau.

Economists predict a 25 basis point cut in October and then another one in December, bringing rates down to 2.5%. Inflation in Europe dropped to 1.8% in September, below the central bank’s target of 2%. Core inflation remains higher, but the trajectory is downward.

Eurozone inflation could rise again in the fourth quarter, especially as energy prices drop out of annual rates calculations. Economists anticipate rates falling to 2.5% in the next year, with some expecting a quicker decrease.

Interest rate cuts by the ECB are expected to continue, with neutral rates projected by mid-2025. Deutsche Bank economists anticipate cuts at each meeting in the first half of 2025. This could have significant implications for bond markets, savings rates, and borrowing costs.



Read more at Morningstar.: ECB Rates Decision: What to Expect on Oct. 17