They assign a 90% probability that another rate cut will be announced at the October 17 meeting, due to falling inflation and the economic weakness of the Eurozone.
The market is preparing for a new interest rate cut in the Eurozone. More and more analysts do not rule out that the ECB will announce another reduction in the cost of money at the Governing Council meeting to be held next October 17, after the cuts announced in June and September.
In recent days, macroeconomic data seem to justify a new rate cut, with inflation having fallen below 2% in the Eurozone and an increasingly weak economy. Adding to this is the escalation of geopolitical tension in the Middle East.
Specifically, preliminary data from the European Union’s statistical office, Eurostat, indicate that the Eurozone inflation rate stood at 1.8% year-on-year in September, four tenths below the increase observed in August and the lowest reading since May 2021. Meanwhile, the core inflation index (more significant for the ECB) reportedly eased by one tenth, settling at 2.7%.
On the other hand, Eurozone business activity deteriorated last September, when the composite PMI index entered contraction territory with a reading of 49.6 points, down from 51 in August, which suggests minimal GDP growth in the third quarter. This is the worst reading of this indicator in the last seven months. The services sector remained in positive territory, while industry dropped to just 45 points, its lowest level in nine months.
Source: idealista
