Ignoring the European Central Bank's cautious tone, the market expects another interest rate cut this year
Economists expect the European Central Bank to cut interest rates again this year, although policymakers have indicated they are not in a hurry to further ease policies. A Bloomberg survey shows that analysts predict a 25 basis point reduction in the deposit rate to 1.75% in September. European Central Bank President Christine Lagarde stated that the central bank is capable of responding to an uncertain environment. Despite inflation being close to target levels, some officials believe that the rate cuts are nearing their end. Inflation is expected to be 1.9% in 2026, with slightly downgraded economic growth expectations
According to Zhitong Finance APP, economists still expect the European Central Bank (ECB) to cut interest rates again this year, despite policymakers indicating they are not in a hurry to further ease policies. A Bloomberg survey shows that analysts continue to predict the ECB will lower the deposit rate by 25 basis points to 1.75% in September.
Prior to this, the ECB cut rates by 25 basis points in June, marking the eighth reduction in borrowing costs within a year.
The market expects the ECB to cut rates again this year.
ECB President Christine Lagarde stated that the ECB is "in a favorable position to respond to the upcoming uncertain environment." Other officials have also advocated for pausing rate cuts in July, as inflation is close to the 2% target level, with some officials suggesting that rate cuts are nearing their end.
Due to the strengthening euro and declining energy costs, ECB staff have lowered next year's inflation forecast to 1.6%. Respondents in the Bloomberg survey maintained their prediction that the consumer price index will continue to rise, with the inflation forecast for 2026 remaining at 1.9%.
At the beginning of this year, the Eurozone economy performed strongly, benefiting from overseas demand that surged in advance to avoid U.S. tariffs. Despite ongoing trade uncertainties, analysts have largely maintained their economic growth expectations, forecasting a 1% growth in 2026, slightly lower than previous expectations, and a 1.5% growth in 2027
