Traders Bet on Earlier and Deeper ECB Cuts as Inflation Slows
- Markets fully price first cut in April, see more easing coming
- Euro-area inflation decelerated more than economists expected
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Traders are betting on an earlier start to European Central Bank interest-rate cuts next year and a deeper easing cycle, after a string of surprisingly low inflation readings in the region’s main economies.
A quarter-point decrease to the ECB’s deposit rate is now fully priced by April and an almost 50% chance is assigned for a cut as early as March, according to swaps tied to the central bank’s meeting dates. Just over a month ago, the expectation was for a first reduction in June.