UBS and Citi Push Back ECB Rate-Cut Calls to September

Market forecasters are pushing back expectations for the European Central Bank’s next interest-rate move after stronger-than-anticipated data and uncertainty over US-EU trade talks. UBS Global Research, which as recently as 7 July predicted a 25-basis-point reduction at the ECB’s 24 July meeting, revised its call on 14 July, saying the first cut is now more likely in September. The bank said it would abandon the forecast altogether if trade negotiations with Washington conclude on favourable terms. Citigroup followed on 17 July, shifting its projection to cuts in September and December, having previously seen reductions in July and September. Citi’s new timeline implies two 25-basis-point moves that would lower the deposit rate from its current 2.00 percent. A separate survey of 84 economists published the same day found all respondents expect the ECB to hold rates this month, while a slim majority—49 analysts—predict one 25-basis-point cut to 1.75 percent in September. Traders are pricing in roughly one quarter-point of easing by year-end.