The ECB's direction of travel is no longer clear

The ECB cut the deposit rate to 2.50%. But alongside today’s 25bp cut, the ECB signalled that the cutting cycle is nearing its end. President Lagarde was even more cautious than we had expected her to be. We believe this reflects growing hesitance in the Governing Council about the need for further rate cuts – at least in the near term. We have postponed our forecast of the final cut to June, as the ECB awaits more information. However, uncertainty for both April and June is high, and squarely dependent on US trade policy and EU defence spending.