LONDON (Multibagger) - ECB Expected to Deliver Rate Cut at October Meeting as Economic Weakness Persists
Several brokerages are anticipating a quarter-point cut from the European Central Bank at its upcoming Oct. 17 meeting, with market pricing indicating an 80% chance of such a move. This follows previous reductions in June and September meetings, as data continues to show economic weakness and slowing inflation in the euro zone.
In September, euro zone business activity contracted unexpectedly, with surveys revealing a stagnation in the services industry and a deepening downturn in manufacturing. Additionally, inflation in France and Spain remained subdued for the month.
Sources have indicated that ECB doves are gearing up to advocate for an October rate cut, despite potential resistance from more conservative members. This marks a shift from the sentiment following the September meeting, where an October cut was seen as unlikely.
Here are some of the latest rate cut forecasts from various brokerages:
- Goldman Sachs: 25 bps, with a forecast of 2.0% by June 2025
- Deutsche Bank: 25 bps, with a range of 2.0%-2.5% by mid-2025
- HSBC: 25 bps, targeting 2.25% by April 2025
- BNP Paribas: 25 bps, projecting 2.25% by end-2025
- RBC: 25 bps, aiming for 2.25% by April 2025
- Barclays: 25 bps, forecasting 2.50% by end-2025
- Citi: 25 bps, likely below 2%
- UBS IB: 25 bps, with a target of 2.25% by end-2025
- ING: 25 bps, expecting 2.25% by end-2025
- BBVA (BME:): 25 bps, projecting 2.75% by November 2025
- SEB: 25 bps, aiming for 2.00% by end-2025
Analysis: The European Central Bank is likely to cut interest rates at its upcoming meeting in response to ongoing economic challenges in the euro zone. This move could impact borrowing costs, investment decisions, and overall economic growth in the region. Investors should pay attention to the ECB's decision and monitor how it may influence financial markets and their portfolios.