According to Reuters, citing seven sources, the European Central Bank‘s (ECB) decision on interest rates for October remains uncertain. ECB doves are advocating for a rate cut in response to weak economic data, while hawks are expected to resist, favoring a pause. Some sources suggest a compromise where rates could be held steady in October but indicate a potential cut in December if economic conditions do not improve, although this contradicts the ECB’s “meeting by meeting” approach.
In light of recent disappointing Euro area business surveys and German sentiment data, traders have significantly increased their expectations for an October cut, with money markets now assigning an 80% probability of a 25 basis point reduction to 3.25%, up from 50% earlier this week. Overall, markets anticipate about 50 basis points in total cuts by year-end.
In response to the report, the EUR/USD pair has trimmed gains, trading flat at approximately 1.1135.
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