Summary

• As expected, the ECB cut all rates by 25bps (deposit rate to 3.25%; main refinancing rate to 3.40%; marginal lending rate to 3.65%) in effect from the next maintenance period starting on Wednesday October 23;
• Unanimous decision to cut. The lack of hawkish resistance is a clear dovish takeaway from today’s meeting;
• Downgrade of the growth assessment following the weak PMIs, with President Lagarde citing possible US trade restrictions after the elections as a key downside risk;
• More confident on reaching the inflation target, which ECB now sees happening mid-2025 instead of later in the year;
• No dovish changes to the forward guidance, contrary to my expectations. Instead, the ECB still expects rates to remain restrictive, and on no particular path.