GDP growth picked up in Q3 but timelier data suggest that the economy is poised for a weak Q4. We expect growth to remain slow next year regardless of whether President Trump raises tariffs on imports from Europe. We also think that inflation will be well below 2% in 2025. As a result, we forecast the ECB to cut interest rates rapidly, and more quickly than investors anticipate, taking the deposit rate down to 1.5% by mid-2025.
Elsewhere, we think that the Riksbank will reduce its policy rate from 2.75% currently to 2.25% early next year, and that the SNB will cut two more times in this cycle taking its policy rate to 0.5% in March. Norges Bank will probably hold fire until January.
Subscriber content
Read this in full, free
Start a free trial and use one of your 10 free starter credits to unlock this piece.