ECB expected to cut interest rates by 25 basis points and forecast gradual approach

From Investing.com: 2024-12-08 03:00:00

The European Central Bank is expected to cut interest rates by 25 basis points to 3% in December, with further cuts predicted in early 2025. UBS analysts forecast a gradual approach, reflecting assumptions of resilient labor markets and gradual wage growth decline. Updated macroeconomic projections, including 2027 forecasts, will be unveiled.

UBS predicts 2024 inflation forecast at 2.4% and 2026 headline inflation at 2.0%, with subdued GDP growth projections. ECB may adjust forward guidance and tone towards inflation target. UBS forecasts German 2-year yields to decline, with a bearish outlook on the euro, targeting 1.04 by 2025 end.

UBS analysts also flagged potential impacts on bond and currency markets, expecting German 2-year yields to decrease and a bearish outlook on the euro. They caution against EUR rebounds towards 1.07 due to potential vulnerability to U.S. policy shifts under the incoming Trump administration.



Read more at Investing.com: Here’s what investors can expect from the ECB this week By Investing.com