Read the central bank’s November forecast from the FT’s Monetary Policy Radar team
With the ECB judging that disinflation was “on track” at its October meeting and with clear signs of economic headwinds, the ECB ditched earlier guidance of “gradual” easing and cut rates for a second consecutive time late last month. Since then, data has showed stronger than expected economic growth for the third quarter and higher than expected inflation for October.
We think there is unlikely to be sufficient data to justify a larger cut than a quarter-point at the December meeting and we assign a 80 per cent chance to this outcome. We assign a probability of 15 per cent for a larger 0.5 percentage point cut, which is substantially less than futures markets are currently pricing and is justified by our belief that rate-setters are unlikely to pre-empt Trump policy actions which remain uncertain.
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