According to Odaily, an increasing number of Eurozone forecasters predict that the European Central Bank (ECB) will resume interest rate cuts in 2026, following a pause in hikes, with rates expected to fall below 2%. Market data suggests that ECB officials are widely anticipated to implement further rate reductions by March 2026. Despite previous confidence among policymakers in achieving a 2% inflation target, the economic outlook has been clouded by U.S. President Donald Trump's threats to impose additional tariffs on the United States.
Businesses and households are also grappling with a lack of political direction in France and Germany, whose sluggish economies have been a drag on the region's overall growth. James, the Global Macro Strategy Head at TD Securities, stated, "The ECB can steadily lower rates while avoiding an inflation surge. However, Trump's trade war will have a more significant impact on the EU than on countries like the UK, indicating that the ECB needs to reduce its policy rates below the neutral level."
