TD Securities: ECB needs to cut its policy rate below neutral

Odaily Planet Daily News: Eurozone forecasters increasingly expect that the European Central Bank will restart interest rate cuts in 2026 after pausing rate hikes, with interest rates falling below 2%. Data showed that markets generally expect ECB officials to cut interest rates further in March 2026. Although policymakers had previously become more confident about achieving their 2% inflation target, U.S. President Trump's threat to impose additional U.S. tariffs cast a shadow over the economic outlook. Businesses and households also face a lack of political direction in France and Germany, where sluggish economies have been a drag on the region. James, head of global macro strategy at TD Securities, said: "The ECB can steadily cut interest rates while avoiding an outbreak of inflation. But the impact of Trump's trade war on the EU will be more significant than on countries such as the UK, which means the ECB needs to lower its policy rate below the neutral level." (Jinshi)