ECB September meeting: gradual easing for the time being

As widely expected, the ECB cut its deposit rate by 25bp to 3.5%. The updated staff projections show slightly higher core inflation and a weaker growth path. While the ECB is “ not pre-committing to a particular rate path”, we think that the new staff projections and the overall tone of the press conference remains consistent with a gradual easing path for the time being. We consequently expect another 25bp cut at the December and March meeting followed by consecutive cuts in the following three meetings, implying a terminal rate of 2.25% by July 2025.