ECB Watch: time to take out that insurance rate cut
Published on
July 9, 2025

Written by
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Arne Petimezas
Director Research
Please find my latest ECB watch piece in the attachment.
- In a nutshell, I expect that the ECB will take out an insurance rate cut at the September meeting. In this regard, you probably have noticed that ECB-speak about further rate cuts is heating up.
- There is no 'smoking gun' that justifies a cut outright I must emphasize. Hence, a September cut is not fully priced in.
- Even after another cut the ECB's preference for an inverted forward curve will remain, given the sclerotic conditions the Eurozone economy finds itself in. Add to that trade tensions.
- Thus, if I am right, the short end should rally a bit from here.