J.P.Morgan Postpones ECB Rate Cut Forecast To December After Policy Meeting

 J.P.Morgan now expects the European Central Bank to lower interest rates once this year in December, from a previous forecast of a cut in October, after the central bank left rates unchanged and maintained an upbeat view on growth and inflation.

The brokerage joins Barclays, which reiterated its quarter-point cut in December, while other major brokerages, including Goldman Sachs and BNP Paribas, retained their view that the ECB would remain on hold this year.

"We acknowledge the clear risk that the ECB is done with cuts, but also want to recognise that the inflation outlook still implies an easing bias," J.P. Morgan strategists said in a note dated September 11.

The ECB held its key rate steady at 2% on Thursday, in line with expectations. President Christine Lagarde, in her press conference, described risks to the economy as "more balanced" than in June but said the inflation outlook was still more uncertain than usual.

"We continue to be in a good place," Lagarde told the press conference, adding that inflation was where the ECB wanted it to be and the domestic economy solid.

Traders are betting on a 95.64% probability for the central bank to hold rates steady at its October meeting, according to data compiled by LSEG.

"The September ECB meeting reinforced our view that data would need to disappoint to justify further rate cuts, and with the ECB already expecting weak near-term growth and softening inflation, the bar looks quite high," BNP Paribas strategists said in a note late on Thursday.