No rate cuts are on the horizon from the European Central Bank because, says Deutsche Bank:

  • it's very rare for the ECB to cut rates when equities have not been declining for several months. Given that the DAX hit fresh all-time highs yesterday, that's an interesting context in a year where the market expects the ECB to cut 128bps in 2024, likely starting in Q2.

And back it up with this graph:

deutsche bank ecb dax rate cuts 08 February 2024 2

DB note on this that:

  • over half the European period covers the Bundesbank, who were institutionally more hawkish than the ECB. But in the 25 years since the ECB’s creation, the pattern isn't much different albeit on a smaller sample size

and while this doesn't mean the ECB won't cut in April if the DAX sticks around its highs, it would be

  • an odd combination relative to history.