ECB set to deepen global easing with rate cut

The bank's president, Christine Lagarde, may be quizzed both on the path forward for further cuts and on what materially changed from the September meeting

Economists now reckon the European Central Bank will speed up its easing to bring borrowing costs down to a level that no longer constricts the economy by the end of 2025. Picture: Michael Probst/AP

The European Central Bank (ECB) is likely to advance the global push for monetary easing this week with an interest rate cut that policymakers had all but ruled out a month ago.

The third quarter-point reduction of this cycle is seen as likely by economists to herald a longer-lasting acceleration in action by officials seeking to cushion the eurozone from the hit to growth created by an extended period of high borrowing costs, and now playing out with a lag.

The bank's president, Christine Lagarde, at the press conference she will host after Thursday’s meeting near the Slovenian capital of Ljubljana, may be quizzed both on the path forward for further cuts and on what materially changed from the September meeting.

With a smaller than usual gap of just five weeks between decisions, and not much new data available, officials appear to be abandoning recent caution about lingering inflation pressures in order to respond mainly to survey data pointing to a contraction in the private sector economy.

Such reports have moved the needle for financial markets and stoked momentum for a cut that is widely anticipated after policymakers largely endorsed the change in bets.

The switch has been abrupt. At the September 12 decision, officials almost excluded a cut in October.

Days later, Slovakian central bank governor Peter Kazimir declared that “we will almost surely need to wait until December” for another move because “very little new information” would be available by October 17.

He is now the sole voice publicly arguing against a move on Thursday, although other hawks could potentially join him behind the scenes.

As for what happens next, economists now reckon the European Central Bank will speed up its easing to bring borrowing costs down to a level that no longer constricts the economy by the end of 2025, a Bloomberg survey shows.

Elsewhere, Chinese data may show the economy continuing to underperform its target, other central banks from Southeast Asia to Chile will deliver rate decisions, and British inflation may finally slow below 2%.

• Bloomberg