Economic trends in the eurozone: towards a further rate cut

Experts predict that the European Central Bank (ECB) could cut its interest rates again in 2026, aiming for a level below 2%. Currently, the deposit rate is at 2.75%.

A new round of rate cuts announced by the ECB 🏦

Economists agree that the European Central Bank (ECB) could lower its key interest rates further by 2026 , aiming for a rate below 2% .

Currently, the deposit rate is 2.75% , but three successive cuts of 25 basis points are expected at the next ECB meetings. This expectation is based on greater confidence in achieving the 2% inflation target .

But risks remain. Donald Trump is threatening new tariffs if re-elected, which would affect the European Union more than the United Kingdom, according to James Rossiter (TD Securities).

Furthermore, the lack of political leadership in France and Germany is weighing on regional growth. Conversely, Spain is showing remarkable resilience, with upwardly revised growth prospects.

What is a drop in interest rates? 📊

The ECB is responsible for monetary policy in the euro area. One of its main tools is setting interest rates . These rates determine the cost at which commercial banks can borrow from the ECB.

When the ECB lowers its rates, it reduces borrowing costs for banks, which can then lend to households and businesses on more favorable terms . This stimulates consumption, investment… and therefore growth.

Why lower the rates? 🎯

The goal of lowering interest rates is clear: to stimulate the economy by making credit more accessible. This encourages:

• Households to consume (housing, equipment…)

• Companies to invest in (recruitment, R&D…)

But an overly accommodative policy can lead to overheating and inflation . That's why the ECB is seeking a delicate balance between economic support and price stability.

How does the ECB make its decisions? 🧠

The ECB's decisions are based on three pillars:

1. Economic indicators : inflation, unemployment, growth…

2. Forecasting models : to anticipate the impact of decisions.

3. Consultations with experts : economists, bankers, European institutions…

Each rate cut is therefore the result of a complex analysis , far removed from impulsive political decisions. It is a technical response to a changing environment.

Another trend: $100 billion invested in leveraged ETFs 💥

While markets remain volatile due to artificial intelligence, cryptocurrencies, and geopolitical tensions, individual investors are showing impressive confidence.

They have invested nearly $100 billion in leveraged ETFs , often focused on the technology and crypto sectors .

Blind optimism or bold strategy? ⚠️

These instruments allow you to multiply gains (but also losses) on a position. Their current popularity reflects:

• Expectations for a rapid rebound in tech markets

• An appetite for risk , at odds with the caution of major institutions

At Evvest , we are closely monitoring this development, but maintaining a cautious approach .

Our current position 🧾

• Leverage should only be used on aggressive portfolios.

• Allocation limited to 5% of the equity portfolio

This allows us to capture part of the potential increase while controlling the risk of a sudden correction .

Conclusion: Between monetary policy and investment strategy ⚖️

The eurozone is entering a phase of cautious recovery , with interest rate cuts planned to support a weakened economy. But risks abound: trade wars, political gridlock, electoral uncertainties…

Meanwhile, investors are showing marked optimism , particularly through leveraged ETFs. This strategy can pay off… provided it is handled with care.

At Evvest , we support you in navigating between these two dynamics , by building an allocation that is both ambitious and resilient .