Overview

• At its June meeting, the ECB is expected to cut its deposit rate by 25 basis points from 2.25% to 2.00%, marking the eighth reduction since mid-2024.
• Eurostat’s preliminary data show headline inflation in the Eurozone dropped to 1.9% in May, driven by a 3.6% decline in energy prices and a slowdown in services cost growth.
• Nearly all Governing Council members have signaled support for another rate reduction, citing persistent downside risks to growth from global trade tensions.
• The euro’s recent strength has further dampened inflation pressures, reinforcing the central bank’s rationale for continued monetary easing.
• Interest rate futures imply at least two more cuts after the summer break, contingent on incoming economic data and growth prospects.