ECB Rate Decision Hinges on Economic Slowdown and Inflation Decline

According to Natixis analysts Alain Durre and Hadrien Camatte, a potential December rate cut by the European Central Bank (ECB) hinges on significant slowdown in the labor market and inflation falling substantially below target. This decline is expected due to lower energy prices and a strengthening euro. The analysts project a 60% chance of the ECB implementing this rate cut at its December meeting, resulting in a terminal deposit rate of 1.75%. However, the central bank will maintain its policy rate unchanged at its upcoming Thursday meeting, keeping the deposit rate at 2.00%.