Source: CNBC
“The European Central Bank is expected to cut interest rates for the second time this year at its Thursday meeting, but disagreement among policymakers may be set to increase amid tariff uncertainty and a potential ramp-up in regional defense spending. Markets had on Wednesday fully priced in a quarter-point rate cut for the March meeting, taking the ECB’s key rate to 2.5% — down from its peak of 4% in the middle of last year. A further reduction to 2% by the end of the year was also priced in. … the central bank now appears within touching distance of the hotly-debated ‘neutral rate’ at which policy is neither stimulating nor restricting the economy, when rates would be expected to be kept on hold. Policymakers disagree on exactly where this level is, and whether rates might need to be brought even lower than that level in response to factors such as low growth.” (03/05/25)