ECB Rate-Cut Expectations Fall as Lagarde Signals an End to Easing
Traders have scaled back their expectations for rate cuts by the European Central Bank (ECB) this year. Previously, markets fully priced in a 25 basis point cut, but now the money market anticipates just 23 basis points of easing by December, down from 32 basis points before the ECB’s recent decision.
This shift is reflected in bond markets as well: yields on two-year German government bonds rose by 7 basis points to 1.87%, showing investors’ growing doubts about further rate cuts. The rise in short-term yields highlights a more cautious sentiment toward monetary easing.
The change follows comments from ECB President Christine Lagarde, who indicated the central bank’s rate-cutting cycle is nearing its end. Her remarks suggest the ECB may soon pause or stop lowering rates altogether.
For investors and markets, this means a likely period of steadier interest rates as the ECB balances inflation control with economic growth. Watching upcoming ECB signals will be key to understanding future policy moves.