The ECB made its first rate Cut in five tears today.

It cut its benchmark deposit by 25bps to 3.75%.

This is a difficult decision for the ECB – there is a risk that inflation could come back. But they are also worried about moving too late and costing Europe economic growth if it turns out that inflation is already under control.

There is a meaningful risk that this rate decision is a mistake – as seen by disagreements among committee members.

Inflation could pick up. Wages or other factors could continue driving inflation. Geopolitical issues could cause price increases. We have seen this happen unexpectedly a number of times over the last few years.

Issuers may want to use this current window to lock in funding and derisk.