Finance
Nomura now expects only one ECB rate cut after policy meeting
Published by Global Banking & Finance Review®
Posted on March 7, 2025
2 min readLast updated: January 25, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on March 7, 2025
2 min readLast updated: January 25, 2026
Nomura now predicts a single ECB rate cut this year, differing from other forecasts, after the ECB signaled a potential pause in its latest meeting.
(Reuters) - Nomura now expects the European Central Bank to lower rates only once this year, diverging from most brokerages that still see at least two reductions, after the central bank signalled the possibility of a pause at its latest meeting.
The ECB lowered the deposit rate to 2.5% on Thursday, its sixth cut since June, and said monetary policy was becoming less restrictive as inflation falls towards its 2% target.
While the wording could suggest further rate cuts, ECB President Christine Lagarde stopped short of reaffirming that rates were on a downward path and instead said that a reduction or a pause were both on the cards.
"The ECB delivered a neutral to marginally hawkish rate cut. We believe the change in wording on restrictiveness is at the margin more hawkish than we expected," Nomura economists said in a note late on Tuesday.
Earlier this week, the brokerage had lowered its ECB rate cut outlook to two reductions from four in 2025, citing the impact of potential fiscal loosening in Germany.
Meanwhile, other global brokerages including Goldman Sachs, Morgan Stanley and Barclays maintained their forecasts of two rate cuts until the mid-year.
BofA Global Research sees four rate reductions - in April, June, July and September. It, however, added "We still think data will ultimately force the ECB to deliver depo cuts to 1.5%, but risks of a pause on the way have risen."
On the other hand, Societe Generale expects a 25-basis point cut in April followed by a pause in June, while Daiwa Capital Markets expects a pause at the meeting next month.
(Reporting by Siddarth S in Bengaluru; Editing by Sonia Cheema)
Nomura now expects the European Central Bank to lower rates only once this year, diverging from most brokerages that anticipate at least two reductions.
The ECB lowered the deposit rate to 2.5%, marking its sixth cut since June, and indicated that monetary policy is becoming less restrictive as inflation approaches its 2% target.
Other global brokerages, including Goldman Sachs and Morgan Stanley, maintain forecasts of two rate cuts until mid-year, while BofA Global Research predicts four reductions throughout the year.
Christine Lagarde did not reaffirm that rates were on a downward path, stating that a reduction or a pause were both possible, which suggests a more cautious approach.
Nomura's revision indicates a more cautious outlook on rate cuts, reflecting concerns about fiscal loosening in Germany and suggesting that the ECB may not be as aggressive in reducing rates as previously thought.
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