Europe | Second ECB rate cut this year, eyes on December

Summary

today’s ECB meeting did not offer much new information, as widely expected, apart from making the second rate cut this year. With virtually no hints today, this meeting supports our expectation of a very gradual cycle of rate cuts, with one more rate cut in December.

Key points

• Key points:
• The ECB cut the deposit facility rate by 25b, as expected, but gave no clues about the path of further rate reductions
• The ECB`s staff maintained that the inflation target will be reached next year but revised core inflation upwards due to persistent service prices. They also slightly revised down activity due to weak private consumption. This assessment is in line with our view
• The ECB remains in a “data dependent” mode. We expect one further cut in December as there were no clear dovish signals for a move in October

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