Following the Federal Reserve, is the European Central Bank also taking a "50 basis point" big rate cut?

After the Federal Reserve significantly cut interest rates by 50 basis points, will the ECB also follow suit with a "50 basis points" rate cut?

On Friday, September 27th, Deutsche Bank economist Phil Odonagho released a report stating that the European Central Bank (ECB) may accelerate interest rate cuts, with a possible 50 basis point cut in December.

Deutsche Bank predicts that the ECB will start a series of 25 basis point rate cuts from December until reaching a final rate of 2%-2.5%. At the same time, the possibility of the ECB directly cutting rates by 50 basis points in December cannot be ruled out. Previously, Deutsche Bank expected the ECB to cut rates by 25 basis points each quarter and reach the final rate by the end of 2025.

However, the market generally expects the ECB to cut rates in October. Currently, the market is betting with an 80% probability that the ECB will cut rates by another 25 basis points on October 17th. HSBC also expects the ECB to cut rates in October, with HSBC's Chief European Economist Simon Wells and his team believing that the ECB will start a series of 25 basis point rate cuts from October until the deposit rate drops from the current 3.5% to 2.25%.

Why is the market's expectation for the ECB to accelerate its rate cuts rapidly increasing? One major reason is that concerns about inflation in the Eurozone are gradually dissipating.

This morning, France and Spain released inflation data, showing that in September, consumer prices in France rose by 1.5% year-on-year, the first time in over three years that it has been below 2%, mainly due to the decline in energy prices; influenced by the decline in fuel, electricity, and food prices, Spain's inflation rate also dropped to 1.7% year-on-year, below expectations.

In addition to the Federal Reserve, many central banks around the world are transitioning from 25 basis point rate cuts to significant 50 basis point cuts.

On September 26th, the Swiss National Bank lowered rates by 25 basis points to 1.0% as expected, stating that "further rate cuts may be possible in the coming quarters," showing a more dovish stance than before. The Swiss National Bank may become the first G10 central bank to lower rates below the estimated neutral rate On September 25th, the Swedish central bank announced a 25 basis point cut in the benchmark interest rate to 3.25%. The Swedish central bank also stated that in the remaining two monetary policy meetings this year, the policy rate may also be cut, and it is possible that a 50 basis point cut could occur at one of these meetings