JPMorgan analysts have increased the likelihood of the European Central Bank (ECB) cutting interest rates by 50 basis points next month from 10% to 20%. This adjustment reflects recent economic data showing a significant decline, slowing inflation, and uncertain trade conditions.
The Eurozone's economic activity is slowing, prompting JPMorgan to predict that the ECB might implement a substantial rate cut by December. Previously, they anticipated such a move in January. Analyst Greg Fuzesi cites recent drops in PMI indices, slowing service sector price increases, trade uncertainties, and already high rates as strong reasons for the potential rate cut.
Following the report, German bond yields fell, with the two-year bond yield dropping by 5 basis points to 1.95%, the lowest since November 2022. The Eurozone experienced unexpected business activity contraction and declining core inflation, with Germany's inflation data also falling short of expectations.
