Slow and steady cuts by the ECB

The ECB looks set to cut its deposit rate from 3.00% to 2.75% next week and signal that further reductions are likely. But it will stop short of giving any precise guidance about the timing and scale of future moves. We forecast that it will lower the deposit rate to 1.5% later this year, which is about 50bp lower than is now discounted in the market.

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