TechFlow, April 17 — According to Jinshi Data, Deutsche Bank expects the European Central Bank (ECB) to cut interest rates by 25 basis points to 2.25% at its April meeting. Although the ECB had left open the possibility of either continuing rate cuts or pausing in March, since then the risk balance has decisively shifted toward a looser policy stance. The economic impact from reciprocal tariffs, rising uncertainty, and tightening financial conditions appears more severe than the ECB anticipated. Furthermore, the assumption that tariffs will boost inflation is now being challenged as disinflationary forces grow stronger. Key downside risks to inflation include a rapid appreciation of the euro, falling oil prices, and increased likelihood of trade diversion—all exerting downward pressure on the inflation outlook. Deutsche Bank notes that inflation risks are now clearly skewed to the downside. While forward guidance following a tariff pause might be only modestly dovish, the ECB must remain flexible in the face of complex and evolving shocks. Deutsche Bank maintains its view that the terminal rate will settle at 1.5%, warning that markets may still be underestimating the risk of deflation.
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