Kutxabank Investment, previously called Norbolsa, foresees that the European Central Bank (ECB) will apply six interest rate cuts of 25 basis points each this year, leaving the deposit rate at 1.5%.
Kutxabank Investment considers that Donald Trump’s victory in the United States and political instability in France and Germany “open the range” with respect to economic growth on both sides of the Atlantic, depending on the timing and intensity of Trump’s foreign trade, immigration and tax measures. The bank points to the “probable end” of the war in Ukraine.
Kutxabank estimates an environment in which it continues the dispersion in the growth of the United States and Europe, with GDP in 2025 standing at 2.3% in the first case, below the 2.7% in 2024, while in Europe it will be 0.8%, the same as in 2024. For Spain, it expects GDP to grow by 2.2 % this year and the CPI drops to 1.9%.
It highlights that Europe faces this complex scenario with a lack of leadership in its two main economies, with Germany in the midst of an electoral process and France having seen Prime Minister Michel Barnier fall after only three months in power. In Germany, the formation of a Government is not expected until next May, while in France it remains to be seen if the new Prime Minister François Bayrou has the capacity to draw up a budget with the spending containment required by the European discipline framework and the rating agencies.
The bank’s investment service points out that European equities will be supported this year by the significant normalization of interest rates and the energy transition and digitalization that will continue to give a lot of visibility to the benefits of certain sectors.
As the main risk, he points out an inflationary outbreak in the United States due to Trump’s trade and immigration policies.
Kutxabank maintains a defensive positioning in the face of unknowns due to trade and China in the utilities, consumer, telecommunications and pharmaceutical sectors. Continue betting on infrastructure and technology, It lowers energy to neutral in the face of Trump’s push and keeps financial, real estate and luxury companies neutral. For the automobile and retail sectors, Kutxabank continues with a negative vision, also in industrial sectors.
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