Davy expects ECB to accelerate interest rate cuts [Video]

Davy has said it expects the European Central Bank (ECB) to cut interest rates by 0.25 percentage points to 3.25% later this week.

In doing so, the ECB would cut rates by 25bps for the third time this year, bringing them down from a peak of 4% set established last September.

The EU financial regulator began cutting rates in June following nearly two years of successive rate raises. Prior to the first raise in July 2022, the ECB’s main deposit rate had been 0% or lower since 2011.

Paul Nicholson, head of investment strategy at Davy, said the stockbroker believes that “the requirement for and trajectory of interest rate cuts has been accelerated over the past weeks.”

He referenced inflation falling below 2% ahead of ECB and market expectations and weakening consumer and business sentiment and economic activity indicators such as purchasing managers index and industrial production data as pointing to slowdown in economic growth.

“In recent weeks, various …