ECB Accounts: Further rate cuts remain on the cards


Policymakers at the European Central Bank (ECB) agreed last month that interest rate cuts should be approached cautiously and gradually, but they also indicated that more policy easing was likely on the horizon, all according to the publication of the bank’s Accounts of the December 11–12 gathering.

Highlights

Regarding the inflation outlook, members were increasingly confident that inflation would return to target in the first half of 2025.

If the baseline projection for inflation was confirmed over the next few months and quarters, a gradual dialling-back of policy restrictiveness was seen as appropriate.

The Governing Council should not let its guard down in the final stretch of disinflation.

There were still many upside and downside risks to the inflation outlook.

More check points had to be passed to ascertain whether disinflation remained on track and kept open the optionality to make adjustments along the way.

This cautious approach was still warranted in view of the prevailing uncertainties and the existence of a number of factors that could hamper a rapid decline in inflation to target.

Some members noted that a case could be made for a 50 basis point rate cut at the current meeting and would have favoured more consideration being given to the possibility of such a larger cut.

Gradual approach was needed to allow an assessment of whether policy rates had reached a broadly neutral level.

It was remarked that a 50 basis point cut could be perceived as the ECB having a more negative view of the state of the economy than was actually the case.

It was advisable to draw on a broad range of approaches to estimate or model the natural rate.

Case for adjusting interest rates by 50 basis points was not the same on the way down as it had been during the rate-hiking cycle.

Geopolitical and economic policy uncertainty had become more pronounced since the last Governing Council meeting.

Risks to inflation were broadly balanced.

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD treads water in the low 1.0400s despite USD losses

EUR/USD treads water in the low 1.0400s despite USD losses

EUR/USD gives away its earlier move to as high as the 1.0470 region and looks to stabilise around the 1.0420 zone on the back of modest losses in the US Dollar, while market participants continue to evaluate the recent interest rate cut by the ECB.

EUR/USD News
GBP/USD keeps the bullish stance around 1.2460

GBP/USD keeps the bullish stance around 1.2460

GBP/USD maintains its constructive view and adds to Wednesday's gains, hovering around the 1.2460 area against the backdrop of a modest decline in the Greenback while investors warm up for the release of US PCE data on Friday.

GBP/USD News
Gold looking for higher highs beyond $2,800

Gold looking for higher highs beyond $2,800

Further gains allow Gold to hit a record top in levels just shy of the key $2,800 mark per ounce troy on Thursday. The move higher in the yellow metal came in tandem with the offered stance in the Greenback and safe-haven inflows in response to persistent threats of US tariffs,

Gold News
El Salvador rushes Bitcoin reform ahead of $1.4 billion IMF loan deal, BTC recovers from China AI shock

El Salvador rushes Bitcoin reform ahead of $1.4 billion IMF loan deal, BTC recovers from China AI shock

Bitcoin island, El Salvador, reformed its policies for a $1.4 billion loan deal from the IMF, according to a Reuters report. The nation’s Congress approved a bill to amend its Bitcoin law and comply with the IMF’s requirement to make the acceptance of BTC voluntary. 

Read more
The ECB cuts rates as its voyage to neutrality continues

The ECB cuts rates as its voyage to neutrality continues

The European Central Bank has cut interest rates again by 25bp and looks set to continue the current rate cut cycle. Even without having it fully telegraphed in recent weeks, today’s ECB decision to cut policy interest rates by 25bp is no surprise. 

Read more
Trusted Broker Reviews for Smarter Trading

Trusted Broker Reviews for Smarter Trading

VERIFIED Discover in-depth reviews of reliable brokers. Compare features like spreads, leverage, and platforms. Find the perfect fit for your trading style, from CFDs to Forex pairs like EUR/USD and Gold.

Read More

Forex MAJORS

Cryptocurrencies

Signatures

Best Brokers of 2025