J.P. Morgan has revised its outlook and now anticipates that the European Central Bank (ECB) will implement interest rate cuts at each of its next four consecutive meetings. This would bring the terminal rate—the level at which the ECB is expected to stop cutting rates—down to 1.5%. This shift in forecast is driven by expectations of economic challenges, including recessionary pressures potentially exacerbated by factors like a U.S.-led trade war under President Donald Trump, which could reduce eurozone GDP growth by as much as 1.5 percentage points by the end of 2026, according to J.P. Morgan’s analysis. This projection marks a more aggressive easing path than the current market consensus, which anticipates fewer cuts over the same period.
