Policymakers will have no choice but to acknowledge next week that they may achieve their inflation target earlier than they had anticipated. Some may push back against expectations that the Bank will start cutting rates in the first half of next year, but we think President Lagarde will concede that rate cuts may not be as distant as previously thought. We now think the ECB is most likely to start loosening monetary policy in around April and forecast the deposit rate to fall from 4% currently to 2.75% by the end of next year.
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