Morgan Stanley: If Germany's fiscal spending plan stimulates economic growth, the European Central Bank may slow down its interest rate cuts

On March 6th, Morgan Stanley Private Bank strategist Madison Faller stated that if Germany’s fiscal spending plan could boost the economy, the Central Bank of Europe may slow down the pace of rate cuts after a 25 basis point cut today. By relaxing the tight fiscal constraints and guiding spending to areas such as defense and infrastructure that have long been neglected, not only Germany but the entire eurozone economy could potentially be significantly boosted. If fiscal measures stimulate economic growth, and credit conditions further improve, the European Central Bank may not need to continue cutting rates significantly. It may be time to pause rate cuts now.