Of the four economies we cover in detail, we think the Eurozone is at lowest risk of experiencing a durable pick-up in inflation. With price rises now almost fully under control, the ECB’s rate path in 2025 will depend on how far economic activity, most notably private consumption, picks up.

The European Central Bank must keep an open mind about the pace of interest-rate cuts as lingering risks in the global economy could still shift the outlook for inflation, according to Chief Economist Philip Lane.

Finnish ECB policymaker Olli Rehn said on Tuesday that euro area inflation is more clearly stabilising at the European Central Bank's 2% target, and that this helps set the stage for further interest rate reduction.