TSX lower as gold rally takes a breather
Investing.com -- European central banks are likely to keep interest rates on hold in the coming months, according to a new report from UBS.
The European Central Bank (ECB) is expected to maintain its deposit rate at 2% at its upcoming meeting on October 30, with UBS analysts believing the easing cycle has ended.
The bank will likely emphasize it is in "a good place" with current rates while maintaining a data-dependent approach.
Despite expectations for weak eurozone growth in the second half of 2025 due to US tariffs, UBS anticipates inflation will remain around or below the 2% target.
The bank cites sizeable fiscal stimulus supporting defense and infrastructure, particularly in Germany, which should become increasingly visible from early 2026.
For the Bank of England (BoE), UBS has revised its forecast and no longer expects a November rate cut. Instead, analysts predict the BoE will keep rates at 4% for the rest of 2025, with the next 25 basis point cut likely in February 2026.
UBS now forecasts a terminal rate of 3.25% rather than 3%, with three 25bp cuts expected in 2026.
The Swiss National Bank (SNB) is projected to maintain its policy rate at 0% following unchanged rates in September. UBS notes that while high US tariffs might delay any rate hikes, the bar for negative rates remains high.
The bank believes foreign exchange interventions would be the first line of defense against temporary safe haven-driven Swiss franc appreciation.
Sweden’s Riksbank, which cut its policy rate by 25bp to 1.75% in September, is not expected to implement further cuts.
UBS forecasts the policy rate will remain at 1.75% for the next several quarters, with the next rate change likely to be a hike to raise rates back to a neutral level around 2.25%, possibly as soon as late 2026.