According to a Reuters survey, over 90% of economists believe that the eurozone's inflation rate will decline more rapidly, with the European Central Bank (ECB) expected to cut its deposit rate by 25 basis points on October 17th and to lower rates again in December.

Only 12% of the economists surveyed last month anticipated a rate cut in October. However, after the inflation rate fell below 2% in September and several members of the Governing Council, including ECB President Christine Lagarde, hinted at a rate cut this month, the majority swiftly revised their expectations for rate reductions in October and December.

Lagarde stated last week during a European Parliament hearing: "The latest developments have strengthened our confidence that inflation will return to target levels in a timely manner. We will take this into account at our next monetary policy meeting in October."

Over the past six months, economists had forecast a total of three rate cuts this year, each by 25 basis points, for the deposit rate, but now they anticipate four cuts.

In the Reuters survey conducted from October 2nd to 8th, out of 75 economists, 70 expected the ECB to cut its rate by 25 basis points for the second consecutive time at next week's meeting, bringing it down to 3.25%. Only five predicted no change. Last month, only about 12% (9 out of 77) of economists forecast a rate cut for October.

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Sixty-eight out of 75 economists believe, in line with market pricing, that the ECB will cut rates again in December to 3.00%.

James Rossiter, Global Head of Macro Strategy at TD Securities, said: "With the easing of overall and core inflation pressures, we believe the ECB will be able to return to a level closer to neutral rates more quickly, as it can manage the downside risks of accelerating economic growth."

"Given that economic growth remains below trend levels next year, this is sufficient for the ECB to steadily cut rates starting in October."

*Inflation*The European Central Bank (ECB) does not have a neutral interest rate estimate, meaning one that neither restrains nor stimulates the economy. However, a paper published by ECB staff this year indicates that the real interest rate, adjusted for inflation, is around zero, with the nominal interest rate at about 2%.

More than 55% of economists (41 out of 72) expect the ECB to cut interest rates twice next quarter, to 2.50%. The survey suggests that the ECB will cut rates twice more in the second half of next year.

This represents a faster path than expected last month but is in line with current market pricing.

The survey found that the eurozone inflation rate fell to 1.8% last month and will slightly rebound next quarter, reaching the ECB's 2% target and remaining at that level until at least 2027. Economists had expected inflation to reach 2% in the second half of 2025.

However, core inflation will remain high this quarter, unchanged from September, averaging 2.7%, and will gradually slow down next year.

"The closer the ECB's key interest rates are to the neutral rate... the greater the likelihood of hawkish members of the ECB Governing Council opposing rapid rate cuts," said Marco Wagner, a senior economist at Commerzbank.

"At the beginning of next year, core inflation may still be around 2.75%, and persistently strong wage growth does not yet indicate that inflation, especially in the service sector, will slow down significantly in the coming months."

Despite recent PMI indices suggesting a slowdown, the eurozone economy is expected to grow at a decent pace over the next year.

The survey indicates that the economy will grow by 0.2% this quarter, in line with the second quarter, averaging 0.7% growth this year, 1.2% in 2025, and 1.4% in 2026.However, the economic growth of Germany, the largest economy in Europe, stagnated last quarter after contracting by 0.1% in the second quarter, and is projected to grow by 0.1% this quarter. It is expected to grow by 0.8% in 2025 and 1.3% in 2026.