Goldman Sachs and BNP Paribas Expect No Further ECB Rate Cuts in 2025

After the European Central Bank held its deposit rate at 2%, two major investment banks—Goldman Sachs and BNP Paribas—have revised their outlooks and now expect no additional ECB rate cuts during 2025. Both institutions argue that a mix of resilient economic performance in the euro area and potential policy developments linked to trade have reduced the likelihood of further easing next year.

Why the outlook has shifted

Goldman Sachs and BNP Paribas point to a stronger-than-expected macro backdrop across the euro area as a key reason for pausing on further rate reductions. When core indicators such as consumer spending, labor market resilience and business activity remain firm, the ECB has less incentive to continue cutting rates aggressively. In that context, both banks judge that monetary policy will likely stay more restrictive for longer than previously anticipated.

BNP Paribas goes even further in its forecast, suggesting that the next directional move from the ECB could be a rate increase, projecting a potential hike in the fourth quarter of 2026. That projection reflects a scenario in which persistent demand and limited disinflation pressures allow the ECB to consider tightening again over the medium term. Goldman Sachs, while stopping short of forecasting a hike on the same timeline, nonetheless joins BNP in concluding that the easing cycle has effectively ended for now.

Trade dynamics and broader policy considerations

Both banks also cite the increasing likelihood of a U.S.–EU tariff resolution as a factor that could support growth in the euro area. A reduction in trade tensions or the removal of tariff-related uncertainty would be expected to boost confidence for exporters and manufacturers, in turn bolstering economic resilience. Such a development could reduce the need for further monetary accommodation from the ECB.

How other major banks are adjusting their views

Goldman Sachs and BNP Paribas are not alone in taking a more cautious view on future ECB easing. Other large lenders, including HSBC and J.P. Morgan, have moved the timing of their first anticipated ECB cut into late 2025 or even later. This broader shift among international banks signals a growing consensus that the ECB’s policy trajectory is more conditional and slower to pivot than markets had earlier expected.

Implications for markets and borrowers

If the consensus that rate cuts will be delayed holds, borrowing costs in the euro area are likely to remain elevated relative to the pre-cut expectations. That situation can affect mortgage rates, corporate borrowing costs and refinancing conditions. Investors and businesses that had planned around earlier rate relief may need to reassess financing strategies and cash-flow plans.

At the same time, a pause or reversal in easing could help anchor inflation expectations if the economy continues to show durability. For households and savers, higher-for-longer rates may yield better returns on deposits, while for highly indebted borrowers the persistence of elevated rates may raise debt-servicing pressures.

What to watch next

Key indicators to monitor include euro-area growth data, inflation trends and labor market reports. Any clear signs of slowing activity or renewed disinflation could reopen the case for cuts, while continued resilience or an improvement in trade conditions could reinforce the view that the easing cycle is over. Policymaker commentary from the ECB will also be critical in shaping expectations about the timing and direction of future rate moves.

For now, Goldman Sachs and BNP Paribas have signaled a cautious stance: the era of easy policy from the ECB may be on pause, and the road to lower rates looks longer and more uncertain than many market participants previously expected.