Thursday’s PMI data from the euro zone is set to grab the attention of investors and policymakers alike. Business activity across the bloc is expected to remain stuck in contraction territory, fueling concerns over the region’s economic health. This gloomy outlook may nudge the European Central Bank (ECB) closer to implementing rate cuts sooner than anticipated.

ECB President Christine Lagarde recently hinted at a cautious approach, stating that future policy shifts will depend on incoming data. However, insiders reveal that some policymakers are already debating whether rates need to drop below neutral levels to boost growth. With futures markets predicting rates could fall below 2% by mid-2024, the pressure on the ECB to act is intensifying.