Brokerages Predict ECB to Cut Rates by 25bps in December
(Reuters) - Major brokerages including Goldman Sachs, Morgan Stanley and Barclays expect the European Central bank to cut interest rates by 25 basis points at its Dec. 12 meeting, rather than a larger 50-bp move, as inflation gradually heads down.
Forecasters at financial institutions also see further rate cuts in 2025. Some predict substantial cuts, taking the ECB-POLICY-CENTENO-a52f21b9-8975-4dc5-9a21-8c5e8267aa43>ECB's benchmark rate below the 2%-2.5% range economists view as neutral, meaning it neither stimulates nor restricts the economy, while others expect the ECB-POLICY-CENTENO-a52f21b9-8975-4dc5-9a21-8c5e8267aa43>ECB to pause around that neutral level.
Money markets price in roughly 150 bps of ECB-POLICY-CENTENO-a52f21b9-8975-4dc5-9a21-8c5e8267aa43>ECB cuts by the end of 2025.
A sharp slowdown in the bloc's business activity in November after its dominant services industry contracted and manufacturing sank deeper into recession, sparked talk of a bigger half a percentage point cut in December.
Forecasts of major brokerages before the December policy meeting:
Brokerage Dec'24 2025 Terminal
rate cut forecast rate/end '25
forecast (bps) forecast
(bps)
BofA Global 25 150 1.50%
Research
Goldman Sachs 25 125 1.75%
(July'25)
ING 25 125 1.75%
J.P.Morgan 50 100 1.75%
Citigroup 25 150 1.5%
(September'2
5)
Peel Hunt 25 100 2.00%
Barclays 25 150 1.5%
Societe 25 75 2.25%
Generale (April'25)
UBS Global 25 100 2.00%
Research (June'25)
TD Securities 25 100 2.00%
(June'25)
Erste Group 25 100 2.00%
Nomura 25 125 1.75%
Morgan Stanley 25 1.25%
Deutsche Bank 25 150 1.50%
Santander 25 100 2.00%
(June '25)
(Compiled by Broker Research team in Bengaluru; Editing by Alun John and Amanda Cooper)
