Fitch Ratings Foresees ECB Ramping Up Interest Rate Cuts
Fitch Ratings Predicts ECB Will Cut Interest Rates by 200 Basis Points by 2025
Fitch Ratings has released a statement indicating that they anticipate the European Central Bank (ECB) to reduce interest rates by a total of 200 basis points by the end of 2025. The policy easing cycle, which began in June, is expected to bring interest rates down to 2 percent.
The recent reduction in policy rates by 25 basis points on October 17, lowering the deposit rate to 3.25 percent, is likely to be followed by another 25 basis point cut at the December meeting.
Throughout 2025, Fitch Ratings predicts that the ECB will continue to lower interest rates by 100 basis points, with 25 basis point reductions occurring in quarterly intervals in March, June, September, and December. Despite these cuts, interest rates are projected to remain high for most of 2025 due to persistent wage and services inflation.
Fitch Ratings considers 2 percent to be the neutral policy rate for the Eurozone and expects it to be the eventual endpoint of the interest rate reduction cycle.
Overall, the forecast suggests that the ECB will take significant steps towards monetary easing in the coming years in response to economic conditions and inflationary pressures.
