Ella 
We expect the ECB to cut rates by another 25 basis points at next week’s ECB meeting on October 17, taking the deposit rate to 3.25%. Lower-than-expected economic growth indicators and falling inflation support another rate cut by the European Central Bank.
Since the release of the U.S. labor market report last week, the market has significantly reassessed expectations for easing policy from major central banks, especially the European Central Bank. Markets are now pricing in a further 47 basis points of rate cuts this year, in line with cuts next week and in December, and a further 97 basis points of cuts next year, in line with our benchmark of 25 basis points of cuts per quarter.
We expect the ECB to provide very limited forward guidance at its upcoming meeting, which means the ECB should stick to the “meeting-by-meeting” and “policy-dependent economic data” approach it has taken over the past few quarters. Ahead of the December ECB meeting, the ECB will provide new forecasts, including for 2027, and we will see very important data points from the Eurozone (PMI twice, inflation twice, wage data, labor force data).
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