Economists surveyed by Bloomberg expect two more ECB rate cuts this year

According to analysts polled by Bloomberg, the European Central Bank (ECB) will reduce borrowing costs two more times this year, in April and June. Thus, the deposit rate will not fall below 2%, as previously assumed.

The shift in experts' expectations followed the European governments' plans to significantly ramp up defense spending. This initiative is likely to spur weak economic growth and accelerate consumer price growth in the region. Apart from military expenditure, Germany is set to revamp its infrastructure with hundreds of billions of euros more, which will add to inflationary pressures at the end of 2026, Marco Wagner of Commerzbank said. 

This opinion is shared by ECB Governing Council member Robert Holzmann. He believes the regulator should refrain from lowering the rate at the next meeting. Eventually, the central bank may be forced to tighten monetary policy again.

Bloomberg survey respondents still expect the eurozone economy to expand. They predict the region's GDP to rise by 0.9%, 1.2% and 1.5% over the next three years, respectively.