MNI ECB Review, Jan'25: Stepping Stone To March Forecasts

Executive Summary

• The ECB cut its three key rates by 25bps, including the deposit rate to 2.75% as unanimously expected.
• The ECB continues to have confidence in the inflation outlook and the economic recovery.
• The nearest President Lagarde came to giving an opinion on potential US tariffs is that they would be a global negative, but with significant uncertainty at this stage clouding estimation.
• Neutral discussions are still premature whilst policy is deemed restrictive - watch for a staff report on Feb 7th.  Bloomberg sources suggest restrictive could be dropped in March, with a 25bp cut priced.
• Market reaction was marginally dovish in rates space. We haven’t seen any analyst view changes but will revert if we do. 

Please find the full report here: ECBReview - Jan2025.pdf