Deutsche Bank Lowers ECB Final Interest Rate Forecast to 1.5%

Forex - Deutsche Bank (NYSE:DB) has reduced its final interest rate forecast for the ECB from 2.25% to 1.5% due to expectations of U.S. customs tariffs under the new Donald Trump administration, weaker macroeconomic performance, and risks of inflation falling below target.

Deutsche stated that many factors, including the precise effects and timing of U.S. tariffs and how Europe will respond, remain uncertain, and they see the ECB's terminal rate dropping between 1.0% and 1.75%.

The ECB's main benchmark rate, the deposit rate, is currently at 3.25%. Deutsche expects a 25 basis point cut in the next five ECB meetings, and although its outlook does not include a 50 basis point cut, it added that larger cuts are a close call.