Institution: Middle East tension may slow down the pace of interest rate cuts by the European Central Bank

On October 17th, Jin10 Data reported that after the European Central Bank announced its third interest rate cut, Abrdn economist Felix Feather said that the inflation impact caused by the tension in the Middle East may prompt the European Central Bank to take more cautious action as the risks of rising oil prices and inflation increase. On the other hand, if the eurozone falls into recession, the European Central Bank may cut interest rates more significantly. Although it refused to commit to further interest rate cuts in advance, we believe that the European Central Bank’s decision framework reinforces our expectation of three more rate cuts by March 2025.