Goldman Sachs says markets underestimate risk of another ECB rate cut

Goldman Sachs warned that markets may be too complacent about the European Central Bank’s policy path, arguing the risk of another rate cut remains underpriced after the ECB left borrowing costs unchanged on Thursday:

The bank said recent eurozone data have been “mixed,” with growth momentum still fragile and inflation easing faster than expected in some economies. Goldman noted that Germany’s planned fiscal stimulus rollout could be slower than anticipated, muting the near-term recovery impulse.

According to the note, the ECB’s December staff projections will be critical in shaping the next phase of policy debate among dovish members. Should inflation forecasts undershoot expectations, Goldman believes the central bank could move toward another rate cut in the first half of 2026, even as policymakers emphasise patience for now.