>> GROUP: Shadow ECB Council / EZB-Schattenrat  Volker Northoff

Dr. Sylvain Broyer (S&P): The ECB's decision to raise rates after the Fed and to cut them sooner indicates differing inflation dynamics across the Atlantic. The Eurozone's inflation is largely attributed to negative terms-of-trade rather than excessive demand. That said, it appears unlikely that the ECB will enact more than two solo rate cuts before the Fed begins this year. Moreover, the Fed's rate reductions are expected to persist until 2026, well beyond the ECB's completion of its cuts. Assuming inflation aligns with targets and growth reaches potential by mid-next year, as projected, the ECB is likely to limit rate cuts to no more than one per quarter until Q3 of 2025, with a deposit rate bottoming out at 2.5%.
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