Goldman Sees Additional ECB Rate Cut After Trump Election Win

(Bloomberg) -- Goldman Sachs economists led by Sven Jari Stehn say that the economic fallout from another Donald Trump presidency will lead the European Central Bank to cut interest rates by an additional 25 basis points in July 2025.

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• Deposit rate is now seen reaching 1.75%, down from 3.25% currently, according to note published Wednesday

• Analysts also expect an extra quarter-point cut by the Swiss National Bank and the Riksbank

• Projections left unchanged for Bank of England, Norges Bank

• “Our analysis points to a 0.5% hit to real GDP in the euro area, ranging from 0.6% in Germany to 0.3% in Italy, with a moderate 0.4% hit to the UK,” according to note

• “European inflation effects from Trump’s policy agenda are likely to be small, because we assume the European economies retaliate against limited US tariffs in the baseline and weaker demand limits any resulting inflationary pressures”

• NOTE: Euro Parity in Play as Trump Win Spurs Biggest Drop Since 2016

--With assistance from James Hirai.

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