Deutsche Bank has cut its ECB final interest rate forecast to 1.5% from 2.25%, citing expectations of US tariffs under the new Donald Trump administration, weaker underlying macroeconomic performance and the risk of below-target inflation.

Deutsche said many of these factors, including the precise impact of US tariffs, their timing and how Europe will respond, are uncertain and it sees the ECB terminal rate falling between 1.0% and 1.75%.

The ECB’s main benchmark deposit rate is currently 3.25%.

Deutsche said it expects 25 basis point cuts over the next five ECB meetings, adding that while its outlook does not include a 50 basis point cut, bigger cuts are a close call.