Societe Generale: It is expected that the European Central Bank will lower interest rates to a terminal rate of 2.25% in April

Societe Generale stated that we expect the European Central Bank to lower its key policy rate by 25 basis points at next week's meeting, which will reduce the deposit rate to 2.75%. The market widely expects the bank to cut rates again in March, when new data and forecasts will help shape discussions about neutral levels. This did not prevent several committee members from expressing a tendency to continue cutting interest rates to 2% at subsequent meetings, but this may be preemptive guidance before potentially disruptive US trade policies. It is also possible that, especially if data continues to show resilience as we expect, the European Central Bank feels it necessary to shift towards quarterly interest rate decisions after March. This would help it better understand how the economy is developing and where neutrality might lie. Currently, we anticipate that the European Central Bank will cut rates again in April with an end-point interest rate of 2.25%.