Markets’ Hefty ECB Rate Cut Expectations Risk Cold Shower

Expectations of European Central Bank interest-rate cuts in 2024 have surged since data last week showed a sharp drop in eurozone inflation, but analysts warn these might have gone too far too fast and risk a swift retreat.

Money market forwards are pricing in a whopping 140 basis points of rate cuts in 2024, starting in April but with a significant probability of a first cut as early as March, according to Refinitiv data.