Analysts from top financial institutions expect the European Central Bank to cut interest rates by 25 basis points during its April 17 meeting, lowering the deposit rate to 2.25%. This would be the seventh consecutive cut, as the ECB grapples with recession risks and moderating inflation across the eurozone.

Some market participants are even factoring in the possibility of a larger 50 bps cut, especially given the recent impact of U.S. trade tariffs on EU exports.

ECB’s Economic Outlook

• Inflation is projected to gradually ease toward the 2% target by 2026–2027.
• Recent ECB surveys show tighter corporate credit access, adding urgency for monetary easing.
• Economic headwinds include sluggish growth and rising global trade tensions.

Impact on Euro

Despite easing expectations, the euro remains relatively stable. The EUR/USD pair is hovering just below 1.1400, but any dovish signals could pressure the euro lower.

ECB President Christine Lagarde has signaled close monitoring of FX movements, warning that a stronger euro could dampen exports and growth, while a weaker euro may fuel import-driven inflation.

What’s Next?

Markets are already eyeing another rate cut in June, potentially bringing the deposit rate down to 2.00% by year-end. All eyes will be on Lagarde’s tone tomorrow — a more aggressive easing stance could shift currency and equity markets quickly.

Disclaimer:
This material is for informational purposes only and does not constitute investment advice. Please consult your financial advisor before making any investment decisions.