The bloc’s central bank has so far lowered its key rate from 4% to 3.25% this year across three 25-basis-point increments between June and October. The possibility that the ECB could opt for a 50-basis-point cut to round off 2024 seemed firmly in play after the latest autumn meeting, with multiple policymakers telling CNBC that they would remain data-dependent, but that a significant slowdown in euro area inflation and a worsening economic outlook for the bloc could warrant a big move in December. Money market pricing now suggests little chance of a jumbo trim. As of Wednesday morning, around 29 basis points’ worth of cuts had been priced in for December, and economists say the November uptick in negotiated wage growth will warrant caution. Headline inflation rose back above target in November, climbing to 2.3% from 2% in October. The euro zone economy meanwhile grew at its fastest pace in two years in the third quarter, albeit only at a rate of 0.4%. high uncertainty around what policies Trump will actually deliver. “Southern European economies will continue to benefit from a post-pandemic tourism boom, and they don’t need to compete with Chinese manufacturing. But the first half of the year is also going to be a standstill politically in Germany and France,” Brzeski said. A potential upside surprise for the euro zone could deliver a delayed impact from the recent growth in real incomes and savings, providing strong support for the economy across 2025, Brzeski continued. Conversely, his downside “bold call” envisions Europe lurching toward its own protectionist measures as a backlash to Trump’s provisions, “plunging global goods trade into a full-blown trade war.”