On April 12th, Goldman Sachs economists led by Sven Jari Stehn raised their expectations for interest rate cuts from the European Central Bank and the Bank of England, citing weaker growth and lower inflation prospects. In their client report released on Friday, they wrote: “Although President Trump’s suspension of reciprocal tariffs on specific countries has brought some relief, the outlook for the European economy has further deteriorated since we updated our forecast last Friday.” Goldman Sachs expects the European Central Bank to cut interest rates by 25 basis points each in April, June, July, and September, and if trade tensions continue to escalate, the number of rate cuts may further increase; Goldman Sachs originally expected the European Central Bank to only cut interest rates by 25 basis points at its meetings in April, June, and July. Goldman Sachs expects the Bank of England to further cut interest rates to 2.75% in the fourth quarter of 2026, compared to the previous forecast of a rate cut to 3% in the third quarter of 2026.
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