BENGALURU, Dec 7 Reuters The European Central Bank will cut interest rates in the second quarter of next year, earlier than previously thought, according to a slim majority of economists in a Reuters poll, as the economy enters a short and shallow winter recession.

After inflation fell to 2.4 last month, ECB hawk Isabel Schnabel told Reuters on Tuesday the central bank could take further interest rate hikes off the table. All 90 economists in the Dec. 16 Reuters poll said the deposit rate would end 2023 at its current record high of 4.00 after the ECB39;s final decision of the year on Dec. 14.

Taking recent commentary as a dovish signal, investors are now pricing in around 150 basis points of cuts starting March next year. But the Reuters survey was more in line with the higher for longer rates narrative.

Around 57 of economists 51 of 90 predict at least one rate cut sometime before the ECB Governing Council meets in July.

That was a change from a November poll where around a 55 majority expected rates would stay at current levels until mid2024 at least.

Medians showed a 25 basis point cut in each quarter of next year starting Q2, significantly less than what markets are currently expecting.

We have pencilled in some rate cuts for next year but not as early nor as steep as markets are currently pricing … I39;m currently still on September as the base case, but I do see risks that they could go in June or July instead, said Bas van Geffen, senior macro…