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ECB governors see one more cut before debate heats up, sources say

European flags are seen in front of the ECB building, in Frankfurt
January 30, 2025
Reuters - Reuters

FRANKFURT (Reuters) - A further European Central Bank interest rate cut is likely to go through in March without much resistance among policymakers before the debate between them on further easing becomes more heated, three of them told Reuters.

The euro zone's monetary policymakers unanimously cut rates for a fifth time on Thursday, repeating that they expect inflation to settle at their 2% target this year against a backdrop of still-weak economic growth.

Three policymakers who spoke to Reuters after the meeting said they saw a consensus for a further rate cut at the ECB's March 6 meeting, to take the rate the ECB pays on deposits to 2.5%.

But they expected a broader, deeper discussion about any further cut after that, possibly implying a pause in April. They were expressing their views on condition of anonymity as these matters have not yet been discussed by the Governing Council.

An ECB spokesperson declined to comment.

ECB President Christine Lagarde said there was no discussion at Thursday's meeting about the final destination for rates and that the size and sequence of any future cut will be determined by incoming data.

But she said the central bank's staff will publish a new estimate on Feb. 7 of the "neutral" interest rate that neither spurs nor curbs economic growth. The ECB currently sees the neutral rate at 1.75%-2.50%.

(Reporting by Balazs Koranyi and Francesco Canepa; Editing by Catherine Evans)

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