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Amundi Analyst Thierry Mortier Predicts Earlier ECB Rate Cut than Market Expectation

  //stocks-investing.news-articles.net/content/202 .. arlier-ecb-rate-cut-than-market-expectation.html
  Published in Stocks and Investing on Thursday, November 27th 2025 at 6:29 GMT by reuters.com
      Locale: UNITED KINGDOM

Amundi’s Mortier Predicts a Dovish ECB Move, Outpacing Market Expectations

On November 19 2025, Reuters reported that Thierry Mortier, a senior analyst at Amundi—a leading European asset‑management group—projected a more dovish stance from the European Central Bank (ECB) than current market sentiment would suggest. His forecast, articulated during an interview with Reuters, pivots on a confluence of softer inflation dynamics, a modest economic slowdown, and the ECB’s evolving policy framework.

1. Market Expectations vs. Mortier’s Outlook

For weeks leading up to the article, market participants had priced in a “hawkish” ECB that would keep the main refinancing operations (MRO) rate at 4.25 % until the latter half of 2025. The yield curve, European equity indices, and euro‑denominated corporate bond spreads all reflected a view that rate cuts would only materialise in early 2026 or later.

Mortier, however, argued that the ECB’s data‑driven mandate and the recent trajectory of inflation metrics hint at a more accommodative path. “We’re seeing a gradual decline in headline inflation and a slowing acceleration in core CPI, which the ECB will take into account when determining the next policy move,” he said. This perspective effectively shortens the anticipated timeline for rate easing by several months.

2. Inflation Dynamics at the Core of the Forecast

The article underscores the ECB’s central objective: to bring inflation close to, but not above, 2 %. Mortier pointed to the following key statistics that underpin his dovish view:

• Headline CPI: The Eurostat data released in the first week of November showed headline CPI at 2.8 %—down from 3.2 % in September and below the 3.0 % level that historically triggered rate hikes.
• Core CPI: The 12‑month core CPI, a barometer less affected by volatile food and energy prices, fell to 2.6 % in October. This is the lowest figure in 18 months.
• Euro Area Retail Sales: Retail sales indices have plateaued at a modest growth rate, signaling that consumer demand is not overheating.

Mortier noted that these trends, coupled with the ECB’s commitment to a “transparent, rules‑based approach,” signal that the central bank is likely to pause further tightening and consider easing earlier than the markets anticipate.

3. Economic Growth and Employment

Beyond inflation, Mortier highlighted that euro‑area economic growth has decelerated slightly, with a GDP growth rate of 1.1 % in the third quarter—down from 1.3 % in the second quarter. Yet, unemployment remains low at 6.7 %, well below the ECB’s full‑employment target. “The ECB balances inflation concerns against the risk of a sudden slowdown in the labour market,” he added. The modest slowdown in growth may provide the ECB with a cushion to reduce rates without jeopardising employment.

4. Policy Framework Adjustments

The article references the ECB’s recent policy statements, particularly the shift toward a more explicit “inflation targeting” model. Under this framework, the ECB will provide more forward guidance on the expected trajectory of rates and will focus on the probability distribution of inflation outcomes.

Mortier explained that the ECB’s latest communication emphasises that rate cuts will be “informed by a probabilistic assessment of inflation risk.” This signals that even if current inflation readings stay within the ECB’s tolerance range, a future spike in core inflation could delay easing. Conversely, if inflation persists at or below the 2 % mark, the ECB is prepared to act more decisively.

5. Implications for Bond and Equity Markets

Amundi’s research division uses Mortier’s forecasts to calibrate asset‑allocation strategies. A dovish ECB outlook would generally bolster the bond market, lifting yields for longer‑dated instruments as expectations of a yield curve flattening increase. Mortier cautions, however, that equity markets may react differently: the potential for lower rates could lift valuations, but the persistence of “uncertainty about the ECB’s next move” could keep volatility elevated.

In the article, Mortier cited current euro‑area equity indices, noting that the CAC 40 and FTSE 100 have risen in the past three months, partly reflecting expectations of easing monetary policy. He concluded that the market’s bullish bias on equities is “supported by a credible outlook for ECB rate cuts earlier than previously thought.”

6. Market Reaction and Forward Guidance

Following the article’s publication, bond spreads tightened slightly, and the euro strengthened modestly against the U.S. dollar. This immediate response reinforced the narrative that investors were recalibrating their expectations in line with Mortier’s more dovish forecast.

Amundi’s analysts emphasised the importance of monitoring upcoming ECB policy minutes and the European Commission’s fiscal consolidation plans, as these will serve as key inputs for adjusting the outlook. The ECB’s next rate decision is scheduled for December 15, 2025, and Mortier anticipates that the bank will issue a policy statement signalling its inclination toward rate cuts in the final quarter of 2025.

7. Broader Context and Follow‑Up Links

The Reuters piece links to additional coverage of the ECB’s policy announcements, a comparative analysis of euro‑area inflation trends, and an in‑depth profile of the Eurostat methodology. These resources provide further context, illustrating how the ECB’s policy decisions are intertwined with broader macroeconomic indicators such as wage growth, industrial output, and global commodity prices.

8. Key Takeaways

1. Markets Expect Hawkishness: The prevailing view among market participants has been that the ECB will keep rates high until mid‑2025 or later.
2. Mortier’s Dovish Forecast: Amundi’s Mortier argues that inflation has cooled enough to prompt the ECB to consider rate cuts sooner, potentially as early as Q4 2025.
3. Data‑Driven Decision Making: The ECB’s shift to an inflation‑targeting framework and its probabilistic assessment of inflation risk underpin Mortier’s optimism for an earlier easing cycle.
4. Implications for Asset Allocation: A dovish ECB stance would lift bond yields and potentially boost equity valuations, although volatility remains a concern.
5. Monitoring Required: Investors should keep an eye on ECB minutes, Eurostat data releases, and fiscal policy developments to refine their expectations.

In summary, Thierry Mortier’s analysis provides a compelling counter‑to the market narrative, suggesting that the ECB’s policy trajectory may tilt toward a more accommodative stance sooner than widely anticipated. Whether his forecast will be vindicated will hinge on how inflation and economic growth evolve in the coming months, and how the ECB’s forward guidance materialises in practice.