Tomorrow’s ECB interest rate cut is the only sure thing on its agenda

The European Central Bank (ECB) will reduce the key interest rate to 2% tomorrow, with traders already pricing in a 99% chance of a 25 basis point cut. This decision follows a decline in inflation to 1.9%, yet economic growth is stagnating at 0.3%.

While further rate cuts are anticipated later in 2025, the ECB has not provided clear guidance about future monetary policy. Analysts expect additional cuts in September and December, but without definitive communications from the ECB, uncertainty persists in the market.