European Central Bank expected to cut eurozone interest rates today after inflation falls
Update:
Date:
Title: Introduction: ECB expected to cut interest rates today
Content: Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Interest rates across the eurozone are likely to be cut today, as the European Central Bank attempts to support the euro economy as it reels from the damage caused by Donald Trump's trade wars.
The ECB is widely expected to cut its key interest rates by a quarter of one percentage point. That would lower its deposit facility rate to 2%, and would be the eighth cut in a year.
A cut looks nailed on, after inflation across the eurozone fell to 1.9% last month, below the ECB's 2% target for the first time since last September.
Markets are pricing almost a 100% probability of a quarter-point cut, reports Ronald Temple, chief market strategist at Lazard Asset Management, adding:
With ongoing declines in inflation and consistently dovish language from ECB members, a rate cut appears to be a done deal. The ECB has previously described 1.75%–2.25% as the range that would be considered neutral monetary policy. Any signals of a change in this view would be surprising.
I continue to expect rates to be reduced to 1.5% by year end given a more aggressive US trade posture against the European Union. Markets suggest a slightly less dovish outlook with rates ending the year just below 1.6%.'
Today, investors will also be interested to hear the ECB's latest forecasts – economists expect cuts to its growth and inflation projections for next year.
The ECB may also signal that it could pause its rate cutting cycle over the summer, before reassessing the situation in September.
Christine Lagarde can also expect questions about her claim last month that the euro could take on a more global role, as the dollar loses influence amid the current trade turmoil.
Lagarde's future could also come up, following claims that she has discussed cutting short her term as European Central Bank president to become chair of the World Economic Forum.
7am: German factory orders for April
9am BST: UK new car sales report for May
9.30am BST: UK construction PMI report
1.15pm BST: European Central Bank interest rate decision
1.30pm BST: US trade data for April
1.30pm BST: US weekly jobless claims data
1.45pm BST: European Central Bank press conference
Update:
Date: 2025-06-05T06:32:14.000Z
Title: German factory orders rise unexpectedly
Content: German factory orders have jumped unexpectedly, defying forecasts that they would fall as Donald Trump's tariffs disrupted trade.
Orders at German manufacturers rose by 0.6% in April, official data this morning shows, beating forecasts of a 1% fall.
Der #Dienstleistungssektor in Deutschland hat im März 2025 nach vorläufigen Ergebnissen real 0,5 % und nominal 0,6 % mehr #Umsatz erwirtschaftet als im Februar 2025. Verglichen mit März 2024 gab es einen Umsatzanstieg von real 0,9 % und nominal 2,7 %. https://t.co/6MPmBo7Drr pic.twitter.com/v6epO6E6mw
Statistics body Destatis also reported that foreign orders declined by 0.3%, despite a 0.5% rise in orders from within the eurozone. Domestic orders increased by 2.2%.
Demand for data processing equipment, electronic, and optical products increased, while there was also a rise in new orders for transport equipment, and for metal products.
Update:
Date: 2025-06-05T06:25:10.000Z
Title: Introduction: ECB expected to cut interest rates today
Content: Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Interest rates across the eurozone are likely to be cut today, as the European Central Bank attempts to support the euro economy as it reels from the damage caused by Donald Trump's trade wars.
The ECB is widely expected to cut its key interest rates by a quarter of one percentage point. That would lower its deposit facility rate to 2%, and would be the eighth cut in a year.
A cut looks nailed on, after inflation across the eurozone fell to 1.9% last month, below the ECB's 2% target for the first time since last September.
Markets are pricing almost a 100% probability of a quarter-point cut, reports Ronald Temple, chief market strategist at Lazard Asset Management, adding:
With ongoing declines in inflation and consistently dovish language from ECB members, a rate cut appears to be a done deal. The ECB has previously described 1.75%–2.25% as the range that would be considered neutral monetary policy. Any signals of a change in this view would be surprising.
I continue to expect rates to be reduced to 1.5% by year end given a more aggressive US trade posture against the European Union. Markets suggest a slightly less dovish outlook with rates ending the year just below 1.6%.'
Today, investors will also be interested to hear the ECB's latest forecasts – economists expect cuts to its growth and inflation projections for next year.
The ECB may also signal that it could pause its rate cutting cycle over the summer, before reassessing the situation in September.
Christine Lagarde can also expect questions about her claim last month that the euro could take on a more global role, as the dollar loses influence amid the current trade turmoil.
Lagarde's future could also come up, following claims that she has discussed cutting short her term as European Central Bank president to become chair of the World Economic Forum.
7am: German factory orders for April
9am BST: UK new car sales report for May
9.30am BST: UK construction PMI report
1.15pm BST: European Central Bank interest rate decision
1.30pm BST: US trade data for April
1.30pm BST: US weekly jobless claims data
1.45pm BST: European Central Bank press conference
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