European Central Bank board member Lane: Very high likelihood of interest rate cut next week.

Jose Luis Escriv, a member of the Executive Board of the European Central Bank, said on Wednesday that given recent data confirming a cooling of inflation prospects, there is a high probability that the ECB will announce a further reduction in borrowing costs at the rate meeting next week. "The market expects the ECB to further cut interest rates by 25 basis points," the ECB board member and Governor of the Bank of Spain said in an interview in Davos on Wednesday. "It feels like the most likely scenario," he added, describing the outcome as "very positive." Traders generally expect ECB officials to continue their rate-cutting cycle at the meeting in Frankfurt on January 29-30, following four rate cuts in 2024, and not following the "hawkish rate cut pace" of the Federal Reserve as some analysts had predicted. With inflation expected to reach 2% later this year, analysts predict that over the next few months, the ECB will have a larger scale of rate cuts compared to the Fed and the Bank of England. Recent speeches by ECB policymakers have generally supported this dovish rate-cut expectation. Earlier on Wednesday, ECB President Christine Lagarde told CNBC that gradual rate cuts could continue, while traditionally hawkish Dutch central bank Governor Klaas Knot did not object to expectations in the interest rate futures market that the ECB would take action to cut rates at the next two meetings, but he refused to make specific predictions. On Tuesday, Bundesbank President Joachim Nagel said that by the middle of the year, the so-called "neutral interest rate level" should be reached, which does not restrict or constrain economic activity in Europe. Francois Villeroy de Galhau, a member of the Executive Board of the ECB and Governor of the Bank of France, said on Tuesday that it is very likely that the ECB will announce rate cuts at each rate meeting this year. He also stated that this could bring deposit rates down from the current 3% to 2% in the summer. "The consensus we have reached is that we will continue to take action at each meeting, and since September we have successfully implemented this practice." One major uncertainty is President Donald Trump's threat to disrupt global trade by imposing tariffs on goods entering the United States. However, due to the unclear specifics of his tariff plans, it is difficult to predict the extent of the impact of Trump's trade policy on the European economy.