ECB to Cut Rates by Another 25bps

The ECB is expected to lower borrowing costs by 25bps in October 2024, following similar moves in September and June.

This would bring the key deposit rate to 3.25%, the main refinancing operations rate to 3.65% and the lending rate to 3.4%.

Investors are also expecting three further quarter point reductions through March 2025, including December.

Inflation in the Eurozone fell below the ECB’s target of 2% for the first time in more than three years in September.

It now stands at 1.8%.

Additionally, there are increasing signs of a weakening Eurozone economy, with GDP growth being revised down to a modest 0.2% in Q2 and PMIs continuing to show a contraction in the manufacturing sector and slowing services growth.