ECB to cut rates next week and December; shallower reductions in 2025: Reuters poll

By Indradip Ghosh

BENGALURU - The European Central Bank will cut its deposit rate by 25 basis points on Sept. 12 and again in December, according to a significant majority of economists in a Reuters poll who predict shallower rate cuts in 2025 than markets are expecting.

Although inflation falling to 2.2% in August, its lowest in three years, and slowing wage growth have given the ECB a green light to ease again next week, economists have held since April their view of a total of three reductions this year. Markets are pricing nearly four cuts.

ECB policymakers are divided over lingering pressures on inflation, which it targets at 2%, versus weak economic growth and a potential recession, sources close to the discussion told Reuters. That suggests policy decisions going forward could be complicated.

A median forecast from a smaller sample of economists in an Aug. 30 - Sept. 5 Reuters poll showed the probability of a recession in the next two years at just 30%, little changed since the start of this year.