UBS slashes German bond yield forecast as euro zone growth sputters
LONDON, Oct 2 (Reuters) -UBS has slashed its forecast for short-dated German bond yields, and said the European Central Bank may have to cut interest rates as low as 1% if weak euro zone growth does not pick up.
The Swiss investment bank said it now expects the two-year German bond yield DE2YT=RR to fall to 1.5% by the end of the year, a sharp drop from the current level of 2.04%, from a previous forecast of 1.8%. Yields move inversely to prices.
UBS' head of European rates strategy Reinout De Bock told Reuters the ECB could cut rates to the 1% to 1.5% area if growth does not improve in the coming quarters, from 3.5% currently.
Reporting by Harry Robertson; Editing by Amanda Cooper
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