ECB Heading For Spring Cuts-Ex ECB Economist

The eurozone economy is likely to avoid recession, but inflation should slow sufficiently for the European Central Bank to reduce its benchmark deposit rate by around 150 basis points this year, former ECB economist Riccardo Trezzi told MNI.

Markets are moving rapidly to price in cuts, noted Trezzi, who said that while January’s Governing Council meeting should produce little change the possibility of downward surprises to inflation meant that cuts could begin to be considered by as early as March.

“When markets understand that something has changed, in this case for the good, they always go ahead of the curve and try to anticipate because it’s the way you make money,” said Trezzi, who worked on the Federal Reserve Board’s inflation desk before taking on a similar role at the ECB.