USDT Stock Trading European Central Bank rate cut expectations heat up

USDT Stock TradingExpectations of central bank rate cuts rise: Eurozone inflation cools, bank stocks under pressure (July 28, 2025)

1. Key data and market expectations

Eurozone CPI in June: up 2.1% year-on-year (previous value 2.5%), the lowest level since March 2021, close to the central bank's (ECB) medium-term inflation target of 2%.

Core CPI (excluding energy and food): fell to 2.3% (previous value 2.7%), indicating that inflationary pressure has further eased.

Market expectations:

The probability of a 25 basis point rate cut in September has risen to 85% (previous about 60%).

The cumulative rate cut in 2025 is expected to reach 75-100 basis points (currently the benchmark interest rate is 3.75%).

2. Policy trends and central bank statements

Recent remarks by central bank officials:

President Christine Lagarde said: "The downward trend in inflation is in line with expectations, and monetary policy will remain data-dependent."

Chief economist Philip Lane hinted: "If inflation continues to decline, policy may be further relaxed in September."

Comparison:

USDT Stock Trading expects a rate cut in September, but the central bank may act faster, putting pressure on the euro against the US dollar (EUR/USD) (currently at 1.0650, down 4.2% in the past three months).

3. Market impact

① Bank stocks fell collectively (interest rate sensitive industries):

Deutsche Bank (DBK.DE) fell 3.1%, a two-month low.

BNP Paribas (BNP.PA) fell 2.4%, and Santander Bank (SAN.MC) fell 2.8%.

Reason: The interest rate cuts compressed the bank's net interest margin (NIM), and the eurozone banking industry is expected to reduce profits by 5%-8% in 2025.

② Bond market reaction:

German 10-year government bond yields fell 8 basis points to 2.15%, a six-month low.

The narrowing of the Italian-German government bond spread shows that the market's concerns about the debt risks of southern European countries have eased.

③ Stock market sector differentiation:

Defensive sectors (utilities, essential consumption) rose as the low interest rate environment increased the attractiveness of high-dividend assets.

Technology stocks (such as ASML and SAP) benefited from the valuation logic of growth stocks, with an increase of more than 1.5%.

4. Economic prospects and risks

Eurozone economy:

Q2 GDP grew by 0.3% month-on-month (expected 0.2%), avoiding a technical recession, but the manufacturing PMI was still below the boom-bust line (48.1).

Interest rate cuts may stimulate consumption and investment, but the effect may be delayed.

Potential risks:

Energy price fluctuations: If natural gas supply is tight in winter, inflation may rise again.

USDT Stock TradingPolicy differences: If the United States postpones interest rate cuts, the depreciation of the euro may aggravate imported inflation pressure.

5. Investment advice

Short-term layout:

Bonds: Increase holdings of eurozone sovereign bonds (such as German government bonds) to lock in the current high yield.

Stocks: Pay attention to low-valuation and high-dividend sectors (such as telecommunications and medical care), and avoid bank stocks.

Long-term observation:

USDT Stock TradingWhether the central bank will turn to a "preventive interest rate cut" mode, similar to 2019.

Can corporate credit demand rebound with lower interest rates?

Outlook: If the interest rate cut is implemented in September, the eurozone may become the region with the loosest monetary policy among the world's major economies, and funds may flow to risky assets, but be wary of stagflation risks.