Big Banks Adjust October Forecasts for ECB, Reports Reuters

LONDON – Major brokerages, including Goldman Sachs and JPMorgan, have adjusted their expectations regarding the European Central Bank (ECB), anticipating a quarter-point rate cut at the meeting scheduled for October 17. This revision follows recent data highlighting economic weaknesses and a slowdown in inflation.

Current market indicators suggest about a 70% probability of such a cut, which would follow decreases implemented during the ECB’s June and September gatherings. The latest data has prompted policymakers to prioritize growth considerations over inflation concerns.

Survey results indicated a sharp and unexpected contraction in Eurozone business activity for September, with the services sector stagnating and an intensifying decline in manufacturing. Additionally, inflation rates in France and Spain for September were notably subdued.

Sources indicate that advocates for a more accommodative ECB policy are gearing up to support a rate reduction in October, although they may face pushback from more conservative members. This marks a shift from the sentiment observed after the ECB’s September meeting, when an October cut was deemed unlikely.

Here are the updated forecasts from several brokerages:

• Goldman Sachs: October ’24 rate cut estimate: 25 bps; December ’24 rate/end ’25 forecast: 2.0% (June 2025)
• HSBC: 25 bps; 2.25% (April 2025)
• BNP Paribas: 25 bps; 2.25% (end-2025 forecast)
• RBC: 25 bps; 2.25% (April 2025)
• JPMorgan: 25 bps; 2.0% (June 2025)
• Barclays: 25 bps; 2.0% (June 2025)
• TD Securities: 25 bps; 2.50% (March 2025)
• Jefferies: 25 bps; close to 2.0% (end 2025)
• Deutsche Bank: -; 2.0%-2.5% (mid-2025)
• Citi: -; likely under 2%
• UBS IB: -; 2.25% (end-2025 forecast)
• ING: -; 2.25% (end 2025 forecast)
• BBVA: -; 2.75% (November 2025)
• SEB: -; 2.00% (end 2025)

This convergence of forecasts underscores the anticipatory shift in how leading financial institutions perceive the ECB’s policy direction amid evolving economic conditions.