Disinflation drives ECB rate cut but investors warn of limited space for further trims

25bps cut

Sorin Dojan
clock • 2 min read

The European Central Bank (ECB) has cut interest rates by 25 basis points to 2% in a move widely expected by markets, with some investors now pricing one “extra cut” in 2025.

At its meeting today (5 June), the Bank's Governing Council noted the recent decline in eurozone inflation and said that while it was currently at 1.9%, it forecast overall 2025 inflation to average out at its 2% target before falling to 1.6% in 2026 and rising again to 2% in 2027.  The Big Question: Do you trust central banks to make the right interest rate calls this year? This marked ECB's eight rate cut since June 2024, and the central bank said a further escalation of trade tensions over the coming months could lead to growth and inflation "below the baseline projections". ...

To continue reading this article...

Join Investment Week for free

  • Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
  • Get ahead of regulatory and technological changes affecting fund management
  • Important and breaking news stories selected by the editors delivered straight to your inbox each day
  • Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
  • Be the first to hear about our extensive events schedule and awards programmes

Join now

 

Already an Investment Week
member?

Login

More on Europe

MainStreet Partners' Daniele Cat Berro: Europe's good intentions and poor execution

MainStreet Partners' Daniele Cat Berro: Europe's good intentions and poor execution

'Chronic slowness' undermining efforts

Daniele Cat Berro
clock 03 July 2025 • 4 min read
Eurozone inflation rises to 2% in June

Eurozone inflation rises to 2% in June

Up from 1.9% in May

Sorin Dojan
clock 01 July 2025 • 2 min read
Disinflation drives ECB rate cut but investors warn of limited space for further trims

Disinflation drives ECB rate cut but investors warn of limited space for further trims

25bps cut

Sorin Dojan
clock 05 June 2025 • 2 min read
Trustpilot