Forecast lighting indicating the 75th anniversary of the Schuman declaration, on the GrossmarkThalle building at the headquarters of the European Central Bank in Frankfurt, Germany, May 9, 2025.
Alex Kraus/Bloomberg by Getty Images
The European Central Bank is almost guaranteed that it will limit its key interest rate on Thursday.
According to LSEG data, the markets were the last prices of about 99% of the 25-spas cutting chance. This would amount to a deposit rate of up to 2%of the mid-2023 of 4%.
But Europe is in the face of highly uncertain economic perspectives, giving the question of what ECB can do outside the Thursday meeting.
Inflation again floats around 2% of the central bank goal Flash data On Tuesday, showing consumer prices in the euro area increased only 1.9% in May. Meanwhile, economic growth was still slow: the gross domestic product in the euro area increased by 0.3% in the first quarter of 2025, according to the latest estimates.
The block is facing many unknowns, both at home and abroad. This includes the tariff program of the US President Donald Trump – commonly considered a negative impact on growth – and potential retaliation movements from the European Union, as well as the way the EU plans to armament re -armament and Great fiscal change of Germany He could play.
Here's what analysts say about the potential subsequent steps of the central bank and what they can mean for consumers.
Evaluation prospects for the rest of the year
Analysts and economists are widely awaiting major interest rates from EBC later in the year, but they do not count on the bank to give a strong indication where the rates are going exactly.
Tuesday inflationary data increased the chances that after this week the next finish may occur in July, said Jack Allen-Reynolds, deputy of the main economist of the euro area.
Others issued a more cautious tone, and Barclays economists suggested in the note last week that the cuttings are on the horizon, but they would not be implemented so quickly.
“We believe that the ECB will remain casual on the path of politics and will continue to follow the approach to the meeting to maintain flexibility and optionality in politics calibration,” they said.
They also expect more foot reductions from EBC, forecasting two more reduction by 25 base in September and December-what means that the EBC would keep rates in the summer months.
Elsewhere, a global BFA research report published at the beginning of this week said that the ECB “ends the reasons not to exceed 2%”, reflecting the suggestion of further rate reduction on the horizon.
He noticed, however, that EBC is unlikely to give you how low it could be.
“We expect some recognition that the door is open to the transfer of rates below 2%, but a very clear signal is unlikely. Uncertainty on the tariff will provide sufficient protection to the perspective council so as not to organize more,” said the report.
Most importantly, EBC will also publish its latest employee forecasts this week, emphasizing what inflation and economic growth expects. This will happen after the latest report of the Organization for Economic Cooperation and Development, which forecast 1% increase and 2.2% inflation for the euro area this year.
How can the rates cut on consumers
In the case of consumers, more ECB rates would mainly affect loans and savings rates.
Exactly how it takes place to them depends on the type of products and how long the rates are set, bass van geffen, a senior macro strategist at Raborearch, said CNBC.
For example, he said that in various ways they would influence the 10-year permanent mortgage and a deposit of demand in various ways.
“The interest rate in short-term deposits tends to follow the deposit rate,” he said.
“A week after the ECB meeting, the policy rate will come into force. So, if the ECB reduces the deposit rate on Thursday, banks will receive 0.25% lower interest on their deposits at the central bank. This may cause a reduction in the interest rate, which they also pay on savings accounts,” explained Van Geffen.
He said that products with permanent long-term rates have more complicated relations from the interest rates of the central bank, because they are not only determined by the current rate of policy-which often changes-but also in future expectations.
“The market has long been expecting that the ECB will lower your feet this week. It can be somewhat already in long-term interest rates. This also means that these long-term feet do not necessarily change after a political decision,” said Van Geffen.