Euro-zone GDP expanded at a decent pace in Q1 but that was partly due to temporary tariff front-running effects. And while higher defence and infrastructure spending will support euro-zone GDP growth late this year and in 2026, the boost will be smaller than some are hoping for. So we expect the economy to grow quite slowly in the coming years. This, together with declining in core inflation, should prompt the ECB to cut its deposit rate twice more this year, to 1.75%, and it may well go further.
Elsewhere, we think that the Riksbank, SNB and Norges Bank will cut rates in the coming months. The risks are skewed towards deeper cuts in Switzerland, whereas in Norway policymakers could yet delay rate reductions.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services