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As had been widely expected, the ECB delivered a second straight 25bp deposit rate cut this lunchtime, the first back-to-back cuts in a decade, taking the main policy rate to 3.25%, its lowest level since last June.

Accompanying the decision was guidance that is now incredibly familiar to market participants, with policymakers repeating that a "data-dependent", "meeting-by-meeting" approach will be taken in terms of future policy decisions, with no pre-commitment being made to a particular policy path.

The decision to deliver two straight 25bp cuts comes as disinflationary progress is made at a much faster rate than policymakers had previously foreseen, with the 1.7% annual headline inflation rate seen in September being in line with where the latest staff macroeconomic projections had expected prices to be in the second quarter of 2026. Coupled with this, significant downside economic risks remain, not only within the bloc, but also stemming from external sources, amid ongoing lacklustre Chinese performance, and lingering geopolitical tensions across the globe.

Policymakers will be hoping that today's move, which comes just five weeks after the previous rate reduction, serves to insulate the eurozone economy against these risks, and ensures that the current economic contraction implied by the latest PMI surveys remains relatively shallow.

Market participants will now look to President Lagarde's post-meeting press conference in around half an hour for further hints on the policy outlook, though any such concrete remarks are likely to be rather thin on the ground. For now, the base case remains that the ECB will deliver another 25bp cut at the December meeting, followed by further such cuts at every meeting in early-2025 until the deposit rate reaches a neutral rate of around 2% next summer. Participants will also pay close attention to whether Lagarde opens the door to the prospect of larger, 50bp cuts, though said 'jumbo' moves seem unlikely for now.