Barclays and Bank of America "surrender," Wall Street no longer expects the ECB to cut interest rates in December
After the European Central Bank kept interest rates unchanged, Barclays and Bank of America revised their forecasts and no longer expect a rate cut in December. The European Central Bank maintained the key deposit rate at 2% and stated that the current policy is in good shape. Despite economic uncertainties, the Eurozone economy continues to show resilience. The market generally believes that the likelihood of a rate cut in December is extremely low. Barclays expects rates to remain unchanged until the end of 2026, while Bank of America anticipates a 25 basis point rate cut in March next year
According to the Zhitong Finance APP, after the European Central Bank (ECB) maintained interest rates on Thursday, Barclays and Bank of America Global Research revised their forecasts and no longer expect the ECB to cut rates at the December meeting.
The ECB kept interest rates unchanged at its latest meeting on Thursday, as expected. The key deposit rate remains at 2%, marking the third consecutive time it has held steady, with the last rate cut occurring in June of this year.
The bank stated that as economic risks recede and the eurozone continues to show resilience in the face of uncertainty, the current policy is in a "good state."
Preliminary growth data released earlier on Thursday showed that the eurozone's economy grew by 0.2% quarter-on-quarter in the third quarter, a figure that exceeded expectations and reinforced the view that the ECB would maintain interest rates. This data indicates that despite the widespread uncertainty brought about by U.S. trade tariffs on business activities, the economy remains resilient.
The ECB has repeatedly stated that its interest rate decisions will be made on a "meeting-by-meeting basis, relying on data," and reiterated this stance on Thursday. However, senior officials at the central bank indicated earlier this month that the rate-cutting cycle is nearing or at its end.
Both institutions had previously expected the central bank to cut rates by 25 basis points at the December policy meeting. Barclays now expects the ECB's rates to remain unchanged until the end of 2026, while Bank of America anticipates a 25 basis point cut in March next year.
In a report on Thursday, Barclays noted: "The ECB has not conveyed any clear signals regarding whether it will maintain its current policy stance and for how long."
Meanwhile, several institutions, including Goldman Sachs and UBS Global Wealth Management, have reiterated their expectations that the ECB will keep rates unchanged for the foreseeable future.
LSEG data shows that the market has reached a consensus, expecting the likelihood of a rate cut by the ECB in December this year to be extremely low, almost zero
