ECB preview: A rate cut, but little guidance

The ECB will cut its deposit rate by 25bp at its September meeting but is unlikely to provide any additional guidance on its next move. The ECB is caught between a weaker than expected economic outlook and a continu ing stickiness of services inflation. T he ECB , we think, will follow a “cautious approach” for the time being and we forecast quarterly rate cuts until March next year. Only then will the ECB have reached a sufficiently high “conviction level” to cut rates at each of the following three meetings, implying a deposit rate of 2.25% by July 2025.