Big banks add October cut to ECB forecasts

Published : 2 weeks ago, on 01/10/2024

 

LONDON (Reuters) -Major brokerages, including Goldman Sachs and JPMorgan, now expect the European Central Bank to deliver a quarter-point cut at its Oct. 17 meeting, revising their forecasts on Friday on recent data showing economic weakness and slowing inflation.

Market pricing now reflects around a 70% chance of such a rate cut, which would follow reductions at the ECB’s June and September meetings, as the data pushes policy makers to focus more on growth and less on price pressures.

Euro zone business activity contracted sharply and unexpectedly in September, surveys showed, as the bloc’s dominant services industry flatlined and a downturn in manufacturing accelerated, while inflation in France and Spain for September came in very soft.

Sources told Reuters that ECB policy doves are preparing to fight for an October rate cut – though this would likely meet resistance from more conservative peers – a turnaround from the aftermath of the ECB’s September meeting when they saw an October move as unlikely.

Here are the latest forecasts from some brokerages.

Terminal

Brokerage Oct ’24 rate Dec ’24 rate/end ’25 forecast

cut estimate estimate (bps)

(bps)

 

Goldman 25 25 2.0% (June 2025)

Sachs

HSBC 25 25 2.25% (April 2025)

BNP 25 25 2.25% (end-2025

Paribas forecast)

RBC 25 25 2.25% (April 2025)

JPMorgan 25 25 2.0% (June 2025)

Barclays 25 25 2.00% (June 2025)

25 25 2.50%

TD (March 2025)

Securities

 

25 25 Close to

Jefferies 2.00% (end 2025)

 

Deutsche – 25 2.0%-2.5% (mid-2025)

Bank

Citi – 25 Likely

under 2%

UBS IB – 25 2.25% (end-2025

forecast)

ING – 25 2.25% (end 2025

forecast)

BBVA – 25 2.75% (November 2025)

SEB – 25 2.00% (end 2025)

(Reporting by EMEA markets team and the Broker Research team in Bengaluru; Editing by Amanda Cooper)