Published by Global Banking & Finance Review®
Posted on June 24, 2025
4 min readLast updated: January 23, 2026
The ECB is set to conclude its rate-cutting campaign in September. Economists see balanced inflation risks, with Eurozone growth forecasted at 1.0% this year.
By Indradip Ghosh
BENGALURU (Reuters) -The European Central Bank will conclude a year-long interest rate-cutting campaign with one more move in September, according to a slight majority of economists polled by Reuters who just a month ago were at odds over where rates would end the year.
A near-60% majority of economists also say risks to their inflation forecasts over the remainder of this year and next are balanced. That follows a period of elevated inflation at the tail-end of the pandemic and inflation persistently undershooting the 2% target in the years before it.
Lingering concern about U.S. President Donald Trump's erratic tariffs and a resolve that the European Union will be hit with a minimum 10% goods tariff regardless have been partially offset by optimism over capital inflows to Europe and infrastructure plans in Germany.
Economists say that suggests there is little need to cut much further now that the ECB has delivered eight 25 basis-point rate reductions, bringing its main rate to 2.0%, four of those moves coming this year. The U.S. Federal Reserve has been on hold so far in 2025.
A more than 53% majority, or 46 of 86, predicted the ECB would cut rates once more, likely in September, according to a June 18-24 Reuters poll. That compares with no clear consensus in last month's survey. Interest rate futures are currently pricing a cut in the fourth quarter.
Twenty-one economists say the ECB will refrain from cutting again, while almost as many, 19, say there are two cuts left to go.
"I'm a very staunch believer there is massive potential here and that potential doesn't just predicate on international funds moving into Europe, but is also based on an uptick in domestic demand," said Julie Ioffe, European economist and macro strategist at TD Securities, who expects one more cut in September.
"We're seeing private consumers increasing their willingness to contribute to the economy, and we're seeing government spending too. I think that's where Europe's potential truly lies."
July 9 is the deadline for a 90-day pause on sweeping tariffs Trump announced on trading partners in April and the EU and the U.S. do not yet have an agreement.
"We've said tariffs are a disinflationary force in Europe and that's what would develop over the summer and...might suggest another cut," Ioffe said.
Poll median forecasts showed the euro zone economy will expand 1.0% this year, a slight upgrade from 0.9% predicted in May, picking up to 1.1% next year and 1.5% in 2027.
Inflation fell to 1.9% last month, below 2% for the first time in eight months, partially dragged down by a strong euro. It was expected to average around there this year, next year, and the year after.
The ECB will have to keep a close eye on the euro, which has gained more than 12% against the greenback so far this year, putting downward pressure on inflation.
The common currency is forecast to gain another 1.4% over the coming year to $1.18 from $1.16 currently, a separate Reuters survey showed.
Asked on the ECB's pain threshold for the euro/dollar exchange rate, the median response from a smaller sample of 20 economists was $1.24.
"I think we'd have to get as high as $1.25 and beyond before it becomes a genuine problem. We've got to remember that move from $1.02 to kind of $1.15 level, was just from a very oversold, cheap euro to something that's kind of closer to fair value," said Dean Turner, chief euro zone and UK economist at UBS Global Wealth Management.
"So it's not really causing that much stress for the overall euro zone economy...I still think we've got a long way to go before it starts to have an impact on monetary policy."
(Other stories from the Reuters global economic poll)
(Reporting by Indradip Ghosh; Polling by Jaiganesh Mahesh and Anant Chandak; Editing by Ross Finley and Hugh Lawson)
The European Central Bank is anticipated to implement one more interest rate cut in September, concluding a year-long campaign.
A near-60% majority of economists believe that the risks to their inflation forecasts for the remainder of this year and next are balanced.
Inflation fell to 1.9% last month, below 2% for the first time in eight months, partly due to a strong euro.
Poll median forecasts indicate that the euro zone economy will expand by 1.0% this year, with slight upgrades expected for the following years.
Economists suggest that tariffs are a disinflationary force in Europe, which could influence the need for further rate cuts.
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