End of the interest rate cut cycle?

As expected, the ECB Governing Council decided to lower the deposit rate to 2.0%. Once again, the decisive factors were the inflation outlook, the momentum of underlying inflation and the transmission of monetary policy. ECB economists forecast inflation of 2.0% for the year as a whole and 1.6% for 2026. The growth forecast for 2025 remained unchanged at 0.9%, while the expectation for 2026 was lowered to 1.1%. President Lagarde's statements confirm our assessment that today's interest rate cut marks the end of the current cycle of interest rate cuts for the time being.