Traders Cut Odds of ECB September Rate Cut to 25%, Expect 5 Bps Easing, 65% Cut Chance by December, 84% by March 2026

Market expectations for the European Central Bank's (ECB) interest rate cuts have shifted notably in recent weeks. Traders have reduced their anticipation of a rate cut in September, with the probability now estimated at around 25%, down from higher earlier expectations. Eurozone money markets have also lowered the expected easing for September to about 5 basis points from an earlier 8 basis points. Looking further ahead, money markets indicate a 65% chance of a 25 basis point ECB rate cut by December 2025, with the likelihood increasing to 84% by March 2026. This adjustment reflects a more cautious outlook on the timing and magnitude of ECB monetary easing in the near term.