Investment banks cut ECB rate cut expectations

investors will continue to consider the impact of Germany's large-scale fiscal stimulus plan and the impact of Germany's plan to increase defense spending in the coming week. Germany's large-scale fiscal stimulus plan has led to a significant increase in German bond yields. Investors are particularly interested in how fiscal expansion will affect economic growth and inflation in Europe, and how this will affect the monetary policy of the European Central Bank. Following the European Central Bank's cut in the deposit rate by 25 basis points to 2.50% this week, Vanguard and Alliance Bernstein have already forecasted that the ECB's rate cut will be smaller. Vanguard currently expects only one more rate cut this year, while Alliance Bernstein expects a revision of the ECB's policy rate to 2% by the end of 2025, higher than the previous expectation of 1.75%.