Germany’s economic outlook improved unexpectedly in December, reflecting a stronger belief that the European Central Bank could cut rates soon as inflation ticks down further, a monthly survey said Tuesday.

The ZEW Indicator of Economic Sentiment, which tracks expectations for the next six months, rose 3.0 points on month to 12.8 in December. That was better than expectations for the indicator to fall to 8.0, according to a consensus of economists polled by The Wall Street Journal.