The ECB is highly likely to cut borrowing costs next week and again in June, investors and economists believe, as Donald Trump’s sweeping tariffs risk pushing the bloc into recession.
Investors are pricing in a 90 per cent likelihood of a quarter-point cut in interest rates at the next ECB rate-setting meeting on April 17, according to Bloomberg data, up from 70 per cent before Trump’s so-called “liberation day” tariff announcements on April 2. They expect two further cuts by the end of this year, with the chance of a third.
A quarter-point cut in April, which would be the seventh consecutive reduction, and another in June “have really become a no-brainer,” said Frederik Ducrozet, head of macro research at Pictet Wealth Management, who said any other decision would be “a disaster”.