Money markets now price in a 65% chance of a 25-basis-point European Central Bank (ECB) rate cut in December 2025, with odds climbing to 84% by March 2026.
Key Takeaways
Money markets assign a 65% probability to an ECB rate cut in December 2025.
Expectations rise to 84% by March 2026, signaling growing conviction on easing.
The first cut would likely be 25 basis points, reflecting inflation moderation across the eurozone.
Markets Shift to Rate-Cut Expectations
According to data from Jinshi, money market traders now see the European Central Bank (ECB) beginning an easing cycle by the end of 2025.
Current pricing implies a 65% chance that the ECB will deliver a 25 basis point cut in December, bringing rates down for the first time in the current cycle.
2026 Outlook: More Cuts Ahead?
The likelihood of additional cuts grows into next year, with March 2026 odds rising to 84% for another 25 basis point reduction.
The move reflects expectations that eurozone inflation will continue to moderate, allowing policymakers to shift from their long‑running tightening stance.
Implications for Investors
Euro Outlook: A rate cut could pressure the euro against the U.S. dollar.
Bonds: Lower rates typically support sovereign bond prices.
Equities: European stocks could benefit if easing boosts growth expectations.
