Daily Market Ahead: Is the ECB Set to Continue Easing at Its First 2025 Meeting?

TradingKey – Here are today’s key economic events to watch.

European Central Bank Rate Decision

On the same day, the European Central Bank (ECB) will hold its first policy meeting of the year. Markets widely expect the ECB to continue cutting rates through mid-2025, potentially weakening the euro. ECB Vice President Luis de Guindos has expressed growing confidence that eurozone inflation will return to the 2% target. However, the focus will shift to risks of slow economic growth. While further rate cuts are expected this year, de Guindos emphasized the need for cautious consideration. Goldman Sachs forecasts a series of rate cuts by the ECB throughout 2025.

Q4 GDP Growth Rates in Europe and the U.S.

Germany, France, and other European countries, along with the U.S., will release their Q4 GDP growth rates, which are expected to impact forex markets. In Q3 2024, the U.S. economy grew at an annualized rate of 3.1%, up from 3% in Q2, and markets expect this growth trend to continue in Q4, boosting demand for the dollar. In contrast, previous data from Germany, Italy, and France have underperformed, leading to lowered market expectations. Goldman Sachs predicts that fiscal tightening in the eurozone will continue in 2025, reducing economic growth by 0.5 percentage points. Analysts also warn that ongoing political divisions in Germany and France may further compound eurozone debt pressures, limiting the euro’s recovery.

Tokyo CPI Annual Rate (January)  

On January 31, Japan’s Ministry of Internal Affairs will release Tokyo’s January CPI and core CPI data. Inflation is expected to remain elevated, reinforcing expectations for a BOJ rate hike.  

In December, Tokyo’s CPI rose to 3.0% year-over-year from 2.6% in November, the highest since April 2023. Core CPI increased to 2.4% from 2.2%, the highest since August 2023.

Asian Markets Closed for Lunar New Year

On January 30, markets in Singapore, China, Taiwan, Hong Kong, and other regions will remain closed for the Lunar New Year holiday, suspending trading activities.