Report: ECB Highly Likely to Cut Rates by 25 Basis Points Next Week

According to a report by Ulrike Kastens, an economist at German asset management firm DWS, the European Central Bank (ECB) is expected to lower its deposit rate by 25 basis points to 3.00% next Thursday, rather than opting for a larger cut of 50 basis points. While the eurozone’s economic outlook has deteriorated and inflation prospects have improved more than anticipated, these factors are not sufficient to prompt a more aggressive rate reduction.

Data from LSEG indicates that the money market currently assigns an 87% probability to a 25 basis point rate cut, compared to a 13% probability for a 50 basis point cut.