UBS predicts that the central bank will implement a series of rate cuts, starting with a 0.25% reduction in December, which would bring the main rate down to 3%. The firm expects further cuts at each subsequent meeting until June, indicating a change in monetary policy aimed at stimulating economic growth.

In view of these anticipated rate reductions, UBS emphasizes the attractiveness of investment-grade fixed income as a viable option for investors seeking higher yields. Additionally, the firm suggests that small- and mid-cap stocks in Europe offer good value and are well-positioned to benefit from the expected rate cuts.