1.75% or the terminal interest rate? The market bets that the European Central Bank will end the easing cycle after a rate cut in December

According to the latest survey by Bloomberg, decision-makers at the European Central Bank (ECB) are expected to maintain the interest rate policy until December, when the anticipated rate cut is likely to mark the end of the current easing cycle.

Compared to the July survey results, economists have delayed their expectations for another rate cut by three months. Most forecasts suggest that after the deposit rate falls to 1.75%, this level will remain unchanged for nine to ten months until demand rebounds, forcing the central bank to change its policy direction.

Postponing the final decision until the end of 2025 allows ECB decision-makers more time to assess the impact of trade turmoil triggered by U.S. President Trump. By the time of the December meeting, policymakers will not only have access to third-quarter economic performance data but will also be able to more clearly gauge the real growth momentum after the economic data distortions caused by the avoidance of U.S. tariffs earlier in the year. The latest economic forecast report will also reveal growth and inflation trends for 2028 for the first time.

Major global central banks are also showing a cautious policy stance: the Federal Reserve has remained on hold this year, and the Governor of the Bank of England admitted last week that "there is substantial uncertainty."

After the ECB kept interest rates unchanged last month, several decision-makers stated that there is currently no need for further rate cuts. The market subsequently lowered its expectations for a rate cut in September, with the probability of a 25 basis point cut by the end of the year slightly exceeding 50%.

TD Securities economists Julie Ioffe and James Rossiter stated: "If a dramatic shift in trade patterns leads to weaker economic data, the ECB may cut rates again to cushion the impact and curb inflation that remains persistently below target—but they will not act rashly before that."

It is worth noting that if decision-makers miss the opportunity for another rate cut at the December meeting, financial markets may conclude that the ECB's easing cycle has officially ended. Another survey conducted before the July meeting indicated that half of the respondents believed decision-makers might skip the July, September, and October meetings consecutively, at which point the market would confirm that interest rates have reached the cycle's bottom