Traders are being advised by Citigroup Inc. to reconsider their expectations regarding the pace of interest-rate cuts by the European Central Bank (ECB) in the coming year.

According to Citigroup's analysts, the market has overly anticipated rapid reductions, with current money market forecasts suggesting cuts at every ECB meeting until June, followed by a single additional cut in the latter half of 2025.

Citigroup's Jamie Searle highlights the opportunity for investors to bet against this prevailing market sentiment, particularly in light of potential trade tariffs that could be imposed by US President-elect Donald Trump on the European region. This situation presents a compelling case for those looking to capitalize on what Citigroup perceives as an overestimation of the ECB's rate-cutting trajectory.