In its third interest rate reduction this year and the second in a row, after the one in September, it is expected that the European Central Bank (EKT) at the meeting of next Thursday, October 17.

The reduction of inflation to 1.8% in the Eurozone in September, combined with the weakening of its economy, make a further cut in the ECB’s deposit rate by 25 basis points to 3.25% almost inevitable.

OR ECB has announced in all tones that decisions on monetary policy will be taken at each meeting based on the available data, wanting to have freedom of movement, depending on the path of inflation towards the medium-term objective of 2% while taking into account the path of economy..

Although inflation is expected to pick up in the last quarter of the year because fuel prices will compare to last year’s low levels, unlike in previous months, it is now clear that it is moving towards the target.

The governor of the Bank of Greece, Giannis Stournarassaid in an interview with the Financial Times that the target is likely to be reached from the first quarter of 2025, earlier than the ECB predicted in September. For this reason, Mr. Stournaras was in favor of reducing interest rates by 25 bp. both in October and at the next meeting in December, while he was in favor of continuing to reduce them in 2025, as long as the de-escalation of price increases continues.

For greater confidence in the achievement of the inflation target, which will be taken into account at the upcoming meeting, the president of the central bank said, Christine Lagarde, speaking to the European Parliament, foreshadowing for her part a possible reduction in interest rates next Thursday.

The sluggish course of the economy makes the faster easing of the ECB’s monetary policy even more imperative. After a 0.3% rise in Eurozone GDP in the first quarter of 2024, it slowed in the second quarter to 0.2%, while the S&P Global Momentum Survey showed that private economic activity slowed slightly in September.

For the first time, in fact, since the beginning of the year, all three major economies of the region – Germany, France and Italy – they operated in conditions of shrinking private economy.

So, the combination of these data makes next Thursday’s decision very likely. It is no coincidence, after all, that none of the members of the Board of Directors of the ECB, with the exception of Slovakia Peter Casimirhas expressed no objection to the prospect of another interest rate cut.

Even well-known “hawks” on the board, such as Germanos Joachim Nagelsaid he is open to a reduction. But also the Dutchman, Klaus Knotthad said he sees nothing strange about investors’ expectations for a quick rate cut.

Markets take their decline in October and December as a given, while they see it continuing at a rapid pace into 2025