ECB likely to delay final rate cut of cycle until December

The European Central Bank (ECB) is expected to wait until December before making what economists believe will be its final interest rate cut in the current cycle, according to a Bloomberg survey.

The findings mark a three-month delay compared with similar polling in July, as policymakers opt for more time to gauge the economic impact of trade disruptions triggered by US President Donald Trump’s tariff measures. Economists now see the ECB’s deposit rate falling to 1.75 per cent by year-end, remaining there for nine to ten months before rising again as demand picks up.

Waiting for a clearer picture

As per Bloomberg, delaying the move until the final meeting of 2025 would allow the ECB to assess how the eurozone economy fared in the third quarter,stripping out distortions from businesses rushing to beat US tariffs earlier this year. December’s meeting will also bring fresh growth and inflation forecasts extending to 2028, giving policymakers a longer-term view.

Global central banks are also in a wait-and-watch mode. The US Federal Reserve has held rates steady throughout 2025 so far, while the Bank of England governor recently admitted there was “genuine uncertainty” over the timing of its next cut.

Market bets shift

The ECB kept rates unchanged last month, and several policymakers have since argued that further reductions are unnecessary for now. Traders have scaled back expectations for a September cut, pricing in just over a 50 per cent chance of a quarter-point move in December. Economists at TD Securities, Julie Ioffe and James Rossiter, told Bloomberg that only if data shows clear weakness from shifting global trade patterns would the ECB act sooner,and even then, December is the likeliest moment.

If officials choose not to move at year-end, financial markets may conclude that the ECB has reached the floor for rates. A prior Bloomberg survey suggested traders would tolerate up to three consecutive meetings without action before assuming the rate cycle is over.

(With inputs from the agencies)