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ECB VIEW: Six More Analysts Call For October ECB Cut Overnight (1/2)

ECB VIEW
BundesbankCentral Bank NewsFixed Income BulletsCEEMEAEurozoneGermanyBulletGlobalEuropean Central BankForeign Exchange BulletsRegionMarkets

Six more sell-side analysts now look for an October ECB cut following yesterday’s national flash inflation data and President Lagarde’s speech to EU Parliament (of the notes MNI has seen): 

  • Bank of America: “Now expect back-to-back cuts of 25bp from now until the depo rate is back at 2% in June-25”…“We stick to our view that the ECB will cut to 1.50%, but think we now get there by end-25, ie six months earlier”.
    • “Bigger and deeper cuts are a possibility if growth actually moves lower from here - but that is currently a risk scenario”.
  • Commerzbank: “The recent noticeable fall in inflation rates and the slump in leading economic indicators have prompted us to revise our ECB forecast, especially since ECB President Lagarde gave corresponding indications [yesterday]”.
    • “The ECB central bankers are likely to return to their more cautious approach to interest rate cuts in 2025 and only take steps at meetings with new projections, i.e. once a quarter. With interest rate cuts in October, December, March and June, a deposit rate of 2.50% would be reached”.
  • Deutsche Bank: “Following an even deeper dip in September HICP inflation than we were expecting, we are accelerating the next ECB 25bp rate cut from December to October”.
    • “A 25bp rate cut in October would better balance the risks to the path of inflation going forward but rates will still be restrictive. Our baseline assumes a 25bp back-to-back pace as rates are reduced to neutral by mid-2025. If the recent weaker growth and inflation trends continue, a 50bp cut in December could be a close call”. 
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Six more sell-side analysts now look for an October ECB cut following yesterday’s national flash inflation data and President Lagarde’s speech to EU Parliament (of the notes MNI has seen): 

  • Bank of America: “Now expect back-to-back cuts of 25bp from now until the depo rate is back at 2% in June-25”…“We stick to our view that the ECB will cut to 1.50%, but think we now get there by end-25, ie six months earlier”.
    • “Bigger and deeper cuts are a possibility if growth actually moves lower from here - but that is currently a risk scenario”.
  • Commerzbank: “The recent noticeable fall in inflation rates and the slump in leading economic indicators have prompted us to revise our ECB forecast, especially since ECB President Lagarde gave corresponding indications [yesterday]”.
    • “The ECB central bankers are likely to return to their more cautious approach to interest rate cuts in 2025 and only take steps at meetings with new projections, i.e. once a quarter. With interest rate cuts in October, December, March and June, a deposit rate of 2.50% would be reached”.
  • Deutsche Bank: “Following an even deeper dip in September HICP inflation than we were expecting, we are accelerating the next ECB 25bp rate cut from December to October”.
    • “A 25bp rate cut in October would better balance the risks to the path of inflation going forward but rates will still be restrictive. Our baseline assumes a 25bp back-to-back pace as rates are reduced to neutral by mid-2025. If the recent weaker growth and inflation trends continue, a 50bp cut in December could be a close call”.