The ECB cut interest rates for a second time this year at the September policy setting meeting of its Governing Council, but a cautious trajectory for rate cuts in the coming months risks choking off an anaemic growth profile across the Eurozone.
Market rate expectations for the ECB over recent weeks have tended to lean towards the Deposit rate ending the year at 3%
However, the exceptional caution of the ECB in its cutting cycle might leave it behind the curve in early 2025, if Eurozone macro data continues to undershoot expectations, and mean a 50bps cut may be necessary at some point in a weaker growth environment.
