Overview

• Markets are pricing a 94% chance of a 25 basis point rate cut, which would bring the ECB's deposit facility rate down from 2.5% to 2.25%.
• Global trade tensions, particularly U.S. tariff policies, are exacerbating eurozone growth concerns, prompting the ECB to maintain its monetary easing cycle.
• Eurozone inflation has declined significantly, nearing the ECB's 2% target, while financial market volatility and weaker trade conditions heighten recession risks.
• ECB President Christine Lagarde is expected to emphasize a data-dependent approach without committing to a specific future rate path during Thursday’s press conference.
• The central bank may signal that the new rate falls within its estimated neutral range of 1.75% to 2.25%, suggesting a potential pause in further cuts could be considered.