Simon Dangoor, interest rate strategist at Goldman Sachs Asset Management, highlighted a significant pricing gap in market expectations regarding the European Central Bank's potential rate cut cycle restart—either in December 2024 or the first half of 2026. In its latest hawkish policy shift risk alert, delays in Germany's fiscal expansion plan were identified as a key catalyst, which both dampens economic growth prospects and weakens the rationale for maintaining current interest rates.

Dangoor's "three-tier nested" model suggests the December policy meeting will unveil economic projections through 2028. If the model indicates inflation falling below target for three consecutive years, dovish forces may push for rate cuts in Q1 2025. "Eurozone PMI has remained below the expansion-contraction threshold for five consecutive months, while Germany’s €43 billion energy subsidy bill remains stalled in legislative procedures," he emphasized in the report. Interest rate swap market data shows only a 31% probability of a 25-basis-point ECB rate cut by June 2026—19 percentage points below the model's estimated value.