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Investing.com -- Deutsche Bank (ETR:DBKGn) has withdrawn its forecast for additional interest rate cuts by the European Central Bank (ECB), joining other brokerages in revising their outlook following the recent U.S.-EU tariff agreement.
In a note released Tuesday, Deutsche Bank analysts stated that the next ECB policy move is likely to be a rate hike at the end of 2026. This shift in perspective comes after the European Union and United States reached a trade deal on Sunday that imposes a 15% tariff on most EU goods - half the rate initially threatened, which helped avoid a major transatlantic trade conflict.
"With a deal having now been reached, trade policy is less of a reason for the ECB to cut policy rates further," Deutsche Bank analysts wrote. "Further easing is now a risk scenario."
The ECB maintained its interest rate at 2% during its meeting last week and presented a somewhat positive assessment of the eurozone economy. This stance has caused investors to question whether additional monetary policy easing will occur.
Since June 2024, the ECB has implemented eight policy rate cuts, but the recent developments suggest a potential shift in its approach to monetary policy.
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