Deutsche Bank's base case scenario assumes three more ECB rate cuts this year to 1.5%

According to Deutsche Bank analysts, the European Central Bank (ECB) will cut borrowing costs three more times this year, bringing its key deposit rate to 1.5% by the end of 2025. However, the brokerage also warned of risks to this forecast.

One of the bank's scenarios suggests that the introduction of partially delayed US tariffs would undermine economic growth in the eurozone. This, in turn, would force the ECB to cut interest rates below the 1.5% level.

Another possible course of events suggests that the region's economic resilience would lead to a pause in the ongoing monetary easing cycle. In this case, the 1.5% level would not be reached.

Deutsche Bank's baseline scenario remains that the regulator will cut interest rates by 25 basis points in June, September, and December.

The ECB stated that the eurozone economy is becoming more resilient to global shocks. However, the outlook for GDP growth is deteriorating due to rising trade tensions. If additional tariffs are imposed by the US, economic growth in the bloc's 20 countries could fall by half a percent this year, as projected by the central bank.