BCE Interest Rates: Here’s When They Will Drop to 2.75%

ECB Interest Rates and Economic Forecasts

The ECB interest rates remain steady at 4.25% after the initial 25 basis points cut in June and the pause in July.
The upcoming meeting on September 12 is highly anticipated, with speculations about another rate cut circulating amidst cautious optimism from officials and uncertain macroeconomic data within the Eurozone.

Olli Rehn, the Finnish representative at the ECB, mentioned the possibility of further interest rate cuts if confidence in inflation slowdown strengthens in the near future.
The Eurozone’s growth is at stake, still uncertain and hindered by industrial weaknesses and discouraging signals from Germany.

Forecasts and Expectations

Economists at Bloomberg have adjusted their interest rate cut predictions up to 2025.
They predict a scenario where the ECB will reduce interest rates once per quarter until the end of next year.
A Bloomberg survey indicates that the benchmark will reach 2.75% by December 2025 after six consecutive 0.25-point cuts, earlier than previously anticipated.

Concerns about internal inflationary pressures have raised questions about the possibility of only one more cut this year, but worsening recovery prospects support the argument for further monetary policy easing.

Economic Outlook

The recent halt in private sector growth in the Eurozone in July, along with ongoing issues in Germany, poses challenges for the region.
Economists have revised down projections for the largest European economy, forecasting a mere 0.1% expansion this year.
Rate cuts could aid the Eurozone’s economic recovery, particularly concerning the fragile industrial growth and sluggish investments, as Olli Rehn highlighted.

The general sentiment among Bloomberg economists leans towards a faster pace in lowering interest rates, aiming for a rate of 2.75% by the end of 2025 to stimulate economic growth in the Eurozone.