(Bloomberg) -- The European Central Bank will start cutting interest rates at every meeting between October and April, according to economists at HSBC.

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“So even if the supply side of the economy remains weak and the labour market only cools gradually, more policymakers may be persuaded that some ‘insurance’ rate cuts might be necessary,” Simon Wells and Fabio Balboni said in a note on Wednesday.

“The ECB might hope that lower interest rates would encourage households to save less, as high saving rates have been a key drag on spending growth recently,” they said.

The five reductions envisioned by HSBC would bring the deposit rate to 2.25%. The new rate path compares with a previous prediction of cuts every other meeting until the key rate hit 2.5% in September.

“Supply side concerns and the lingering uncertainty on the landing zone for eurozone inflation — which is not likely to be resolved until the first half of 2025 at the earliest — should mean that the ECB feels no need to follow the Fed with any half-point cuts,” Wells and Balboni said.

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