Published by Global Banking & Finance Review®
Posted on July 29, 2025
2 min readLast updated: January 22, 2026
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Deutsche Bank revises its ECB rate forecast, expecting a hike by 2026 following a US-EU tariff deal. ECB rates remain at 2% with potential cuts to 1.85% by December.
(Reuters) -Deutsche Bank on Tuesday became the latest brokerage to withdraw its forecast for further interest rate cuts by the European Central Bank, while betting the next policy move to be a hike at the end of 2026 following a tariff deal between the U.S. and EU.
Last week, Goldman Sachs and BNP Paribas scrapped their forecasts for rate cuts this year. HSBC reiterated that the central bank is done cutting rates.
BNP expects the ECB to deliver a rate hike in the fourth quarter of 2026.
The European Union and the U.S. sealed a trade deal on Sunday, imposing a 15% tariff on most EU goods — half the threatened rate and averting a major transatlantic trade war.
"With a deal having now been reached, trade policy is less of a reason for the ECB to cut policy rates further," analysts at Deutsche Bank said in a note. "Further easing is now a risk scenario."
The ECB held rates steady at 2% last week and offered a modestly upbeat assessment of the euro zone economy, raising doubts among investors about further policy easing. The central bank has cut its policy rate eight times since June 2024.
Other major brokers, including Morgan Stanley and UBS, have also flagged uncertainty around a September rate cut.
Traders expect the ECB to cut rates twice more to around 1.85% by December. They then price a small chance of a rate hike by September 2026, according to data compiled by LSEG.
(Reporting by Joel Jose in Bengaluru; Editing by Shilpi Majumdar)
Deutsche Bank withdrew its forecast for further interest rate cuts by the European Central Bank, predicting that the next policy move will be a hike.
Goldman Sachs and BNP Paribas also scrapped their forecasts for rate cuts this year, while HSBC stated that the ECB is done cutting rates.
The European Central Bank held rates steady at 2% last week and provided a positive outlook on the euro zone economy.
Traders expect the ECB to cut rates twice more to around 1.85% by December, with a small chance of a rate hike by September 2026.
With a trade deal reached that imposed a 15% tariff on most EU goods, analysts at Deutsche Bank noted that trade policy is less of a reason for the ECB to cut rates further.
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