Euro Faces Hit From Prospect of Accelerated Rate Cuts
Euro Could Fall on Potential ECB Rate Cut Acceleration #
The euro may face downward pressure if the European Central Bank (ECB) decides to speed up its interest-rate cutting cycle in response to deteriorating economic conditions in the eurozone.
A revised forecast now anticipates a more aggressive easing strategy, with a 25 basis points interest rate cut expected at the October 17 meeting. This would be followed by additional 25bps cuts at each subsequent meeting until April 2025, potentially bringing the key deposit rate down to 2.25%.
This updated outlook represents a shift from previous expectations, which had projected 25 basis-point cuts at every other meeting, reaching 2.5% in September 2025.
The revised forecast comes in the wake of worsening economic indicators in the eurozone, including recent purchasing managers’ surveys and German Ifo data. Additionally, signals from ECB officials have hinted at the possibility of faster rate cuts in response to these economic challenges.
These developments suggest a potentially more dovish stance from the ECB, which could have significant implications for the euro’s value in the foreign exchange market.