Goldman Sachs and BNP Paribas have revised their outlooks following the European Central Bank’s decision to keep the deposit rate unchanged at 2%. Both banks now expect no further ECB rate cuts during 2025, signaling a shift from earlier expectations that the easing cycle would continue.
BNP Paribas takes an even more conservative stance, forecasting that the next move by the ECB could be a rate increase as early as the fourth quarter of 2026. That projection reflects the bank’s assessment that the euro-area economy is showing resilience, which would reduce the need for monetary stimulus and could justify tighter policy over time.
Goldman Sachs concurs that the immediate prospect for additional easing has diminished. Its updated view attributes the end of the easing cycle to stronger-than-expected economic data in the eurozone and evolving global dynamics, including trade developments that may affect inflation and growth.
Other major lenders have also pushed back their expectations for when the ECB might begin cutting rates. HSBC and J.P. Morgan, among others, now anticipate that the first cut will arrive in late 2025 or even later. These revisions stem from a similar reading of robust domestic demand, resilient labor markets, and persistent inflationary pressures that keep central-bank options limited.
Analysts point to several factors behind the revised timelines. A resilient euro-area economy reduces the urgency for policy easing, while potential international developments—such as a prospective U.S.–EU tariff agreement—could lower trade-related uncertainty and support growth. Lower uncertainty and firmer activity would lessen the case for near-term rate reductions.
Market participants will continue to monitor incoming data for signs that policy makers might change course again. Key indicators include inflation metrics, wage growth, employment figures, and indicators of domestic demand. Any sustained drop in inflation or a notable slowdown in activity could prompt new forecasts that reopen the window for cuts.
For now, the consensus among several large financial institutions is that the ECB has completed its easing cycle for the immediate future. That consensus shapes expectations across markets, influencing bond yields, currency values, and borrowing-cost forecasts for businesses and consumers in the euro area.
Investors and policymakers are likely to treat central-bank communications and incoming macroeconomic data as decisive in the coming quarters. While forecasts can change with shifting economic conditions, the current outlook reflects a cautious tilt toward maintaining policy rates until clearer signs of weakening inflation or growth emerge.