#ECB President Lagarde

[betweenheroesandvillains]

always the immense disappointment when you see an older woman who should by all rights be a lesbian and then she isn't

[xtruss]

Europe’s Economy Looks To Be Heading For Trouble! Will Policymakers Still Lift Interest Rates?

— August 31st 2023 | Finance and Economics | Brace For Impact

Containers are Pictured in the Harbour in Frankfurt, Germany. The European Central Bank is in the Background. Image: AP

Europe’s summer was a strange mixture of heavy rainfall and wildfires. The continent’s economy was also plagued by extremes. Inflation remained hot: prices rose by 5.3% in August compared with a year earlier. And officials are increasingly worried by the cloudy growth outlook. A recent drop in the purchasing managers’ index (pmi) suggests the bloc is facing recession.

Ahead of the next meeting of the European Central Bank (ECB) on September 14th, policymakers will be worried by the possible emergence of stagflation (a situation in which low growth is paired with entrenched inflation). Christine Lagarde, the Central Bank’s President, recently reiterated her commitment to bringing down inflation and setting interest rates at “sufficiently restrictive levels for as long as necessary to achieve a timely return of inflation to our 2% medium-term target”. In plain English: the ECB would much prefer a “hard landing”, featuring economic pain, to failing to reduce price rises.

The problem is that the ecb risks crashing the plane. Euro-zone inflation is proving as stubborn as the American variety. In Europe, price rises were sparked by increasing energy costs; in America, they were more demand-driven. But in both places inflation has followed a similar path, with Europe slightly behind. Now the question is whether core inflation, which excludes volatile energy and food prices, will come in to land. So far, it is staying stubbornly high (see chart).

This is in part because Europe has, like America, so far managed to dodge recession. At the end of last year, when many expected a European downturn, monetary tightening had yet to hit the economy and national governments offered generous handouts in order to counteract the energy shock. The service sector showed decent growth, and industrial order books remained full from the post-covid boom.

Gloom is now spreading across the continent. The global economy is weakening, and order books have plenty of blank pages. State support for households is also running out. Retail energy prices remain higher than before last year’s crisis; real incomes have yet to recover. Activity in the service industry contracted in August, according to the PMI Survey. The sector is at its weakest in two and a half years.

Higher interest rates have also started to affect the European economy, as intended by the ecb’s policymakers. Construction, which is traditionally sensitive to interest rates, is feeling the pain. Stingier bank lending is leading to a 0.4 percentage-point reduction in gdp growth each quarter, according to Goldman Sachs, a bank. Corporate insolvencies rose by more than 8% in the year’s second quarter, compared with the first, and have reached their highest since 2015. The impact of tighter monetary policy will peak in the second half of this year, predicts Oliver Rakau of Oxford Economics, a consultancy.

A hard landing is thus almost guaranteed. But the return of inflation to the ecb’s 2% target remains some way off. Two forces are pulling prices in different directions. One is the situation in the labour market. Unemployment remains at a record low. Although firms are hiring fewer workers, there is no imminent danger of mass lay-offs—in part because bosses want to hold on to workers that are increasingly scarce in an ageing continent. As a result, wages across the bloc are rising, even if not by enough to make up for earlier inflation.

The other force, which is pulling down inflation, is weakening demand for wages. During the covid pandemic, price growth took off in advance of wage growth, causing companies’ profits to rise strongly alongside inflation. If companies now find that demand is drying up, it is possible that inflation will fall at the same time as wage growth stays high, bringing profits back down. Indeed, prices on wholesale markets for goods are already falling fast, and import prices are also declining. At some point, these lower prices will be passed on to consumers.

Which of these two forces will win out? At the moment, it looks like the answer will be weak demand, since it has spread to the service sector, too. This suggests that euro-zone inflation might fall in relatively short order. But the ecb appears unconvinced, and seems ready to lift its main rate to 4.5% from 4.25%. Policymakers would be better off holding rates steady, so that they can assess the danger of a crash. ■

— This article appeared in the Finance & economics section of the print edition under the headline "Brace For Impact"

[accapitalmarket]

EURUSD jumps after ECB flags inflation threat, USDJPY nears key level

ECB Cuts Rates Again as the Inflation Threat Grows

The European Central Bank (ECB) President and Vice President spoke at a press conference regarding factors that affect the most recent interest rate decisions. ECB President Christine Lagarde decided to reduce the main deposit facility rate by 0.25% to 3.5% as inflation concerns continue.

The decision comes as the inflation rate is expected to increase again for the final quarter of 2024 after easing down towards the 2% target rate.  The press conference highlighted high wage growth as the main risk for increasing price growth.

After the news, EURUSD rose to test the descending trendline and 1.11 level. The price looks likely to break out of the descending flag to test the 1.12 for potential resistance soon.

EURJPY has continued to decline quickly as the price nears the 1.55 pivot, which saw strong demand as recently as last month. If the price falls further, it will probably find enough demand to rise to test the descending trendline.

US Consumer Sentiment Beats Forecasts as Confidence Grows

The US Prelim Consumer Sentiment was 69, up from 68.3 forecasted and 67.9 previously. The confidence comes as the annual inflation expectation drops to 2.7% from 2.8%. Additionally, the Current Conditions Index increased to 62.9 from 61.3, while the Consumer Expectations Index also improved.

Following the release, USDJPY fell rapidly to test the 140.50 level, which saw substantial demand in January. The bearish trend will likely find support as the price drops further through 140.50.

Disclaimer:

The information contained in this market commentary is of general nature only and does not take into account your objectives, financial situation or needs. You are strongly recommended to seek independent financial advice before making any investment decisions.

Trading margin forex and CFDs carries a high level of risk and may not be suitable for all investors. Investors could experience losses in excess of total deposits. You do not have ownership of the underlying assets. AC Capital Market (V) Ltd is the product issuer and distributor. Please read and consider our Product Disclosure Statement and Terms and Conditions, and fully understand the risks involved before deciding to acquire any of the financial products provided by us.

The content of this market commentary is owned by AC Capital Market (V) Ltd. Any illegal reproduction of this content will result in immediate legal action.

[head-post]

Eurozone inflation rises in July

Inflation in the eurozone has once again become the subject of lively discussions in economic circles as its level exceeded expectations and reached 2.6 per cent in July, 2024. This unexpected increase has raised a number of questions and concerns among economists and investors alike, POLITICO reports.

The underlying picture also shows no signs of improvement for the third consecutive month. Excluding more volatile items such as food, alcohol, tobacco and energy, inflation came in at 2.9 per cent, defying analysts’ expectations of a decline to 2.8 per cent.

The price breakdown showed that services inflation, which is a particular focus of the European Central Bank  (ECB) because of its high correlation with domestic factors, slowed slightly to 4 per cent. Daniel Kral of Oxford Economics said via X that this detail would be the most worrying for the ECB, noting that it has been picking up in recent months. By contrast, energy prices rose 1.3 per cent year-on-year, up from 0.2 per cent in June.

On a monthly basis, which is a cleaner though more volatile reflection of current trends, prices were broadly unchanged, but goods prices fell 2.6 per cent, while services prices rose 1.2 per cent. The drop in goods prices might have been larger were it not for strong clothing sales in Italy, where retailers’ usual summer discounts this year were much smaller than last year, J.P. Morgan’s Greg Fuzesi said in a note to clients. As a result, Italy’s annual consumer price index more than doubled to 1.7 per cent from 0.8 in June.

Fuzesi also highlighted some rounding effects from Eurostat, which generally suggest that any upward “surprise” in the core numbers may be more noise than signal.

Waiting for September

The ECB’s next monetary policy decision will be made on September 12. President Christine Lagarde said in her latest press conference that a decision in September is ‘wide open’, but markets are pricing in an 80 per cent chance that the ECB will cut the key deposit rate to 3.5 per cent from 3.75 per cent currently.

The key point is likely to be how policymakers view price pressures in the all-important services sector.

“Surely, they’d like to see services inflation falling from the current level,” George Moran, European economist at Nomura, told POLITICO, adding, however, that today’s release does keep the chance of a rate cut intact.

What makes things even more difficult for policymakers is that the eurozone economy still grew by a healthy 0.3 per cent in the second quarter despite early signs of a slowdown, Eurostat said on Tuesday.

“Today’s figures have slightly reduced the probability of a rate cut in September,” said ING’s Global Head of Macro Carsten Brzeski. “But there’s still six weeks of data to be seen before the ECB has to make a decision.”

Read more HERE

[tradermade]

Hold or Hike? ECB Decision Day! The European Central Bank (ECB) is set to announce its verdict on interest rates. Will President Lagarde keep rates steady or surprise the markets? Explore the details: https://markets.tradermade.com/breaking/hold-or-hike-ecb-decision-day

[coinmystique]

Supply: Pixabay / HansEuropean Central Financial institution’s (ECB) president Christine Lagarde mentioned that there's a lot happening in crypto, nevertheless, a ‘digital Euro’ pilot “will probably take us another two years, at least, before it’s the final say.”Addressing lawmakers on the EU Parliament's Economic and Monetary Affairs Committee on Monday, Lagarde mentioned that a central financial institution digital forex (CBDC) is not going to eradicate money, nor substitute it.“If it can be user friendly, if it can be free, if it can be a universal digital mode of payment throughout the entire Euro system, I think it will have checked many of the boxes, which I believe would characterize it as success,” she famous.ECB Mulls To Deal with ‘Conspiracy Theories’The ECB chief pressured that there are “conspiracy theories” about CBDCs, which should be addressed earlier than claiming it to be successful.“We can address all the conspiracy theories that bounce about this as if ‘BIG BROTHER’ is suddenly going to determine what you buy, when you buy it and how restricted it should be – then I think it would be characterized as a success.”Lagarde answered to the questions posted by German centrist lawmaker Nicola Beer. She requested Lagarde how the ECB would examine all the most important privateness issues for transaction and holding limits, and identification, with the consequence of whole traceability.Beer referred to the financial institution’s plans to curb cash laundering and prohibit massive CBDC holdings from overturning the industrial banking system, and requested whether or not this does “not hinder the acceptance of the digital euro?”The usage of digital forex depends upon how we handle to be sure that privateness is protected, Lagarde added. “Not anonymity, but privacy.”Digital Euro “Not Yet Out There”Lagarde additional famous that though loads of work has been executed within the final three years by way of exploring and surveying the Europeans on what they need by way of a CBDC, “it is not until later in October that the governing council will decide whether we can move ahead with more piloting of the project.”“The pilot will probably take us another two years, at least, before it’s the final say.”Her feedback come according to ECB Board Member Fabio Panetta, who mentioned early this month that a potential resolution by the Governing Council to subject a digital euro shouldn't be on the desk now. A choice “would only be taken after the legislation is adopted,” she confirmed.“Let me emphasize, once again, that the issuance of a digital euro represents an opportunity, not a risk, for the European financial sector,” Panetta mentioned on the time. “We are designing it as a safe payment tool in order to preserve the role of public money, while balancing innovation in payments with the stability of the financial sector and guaranteeing privacy.”

[influencermagazineuk]

French Election's Big Impact on Financial Markets

Financial markets are more concerned about the French election than the UK vote. This is because the results ought to substantially impact French government debt and the Eurozone's financial balance. Investors are nervously watching the second one round of balloting, as results like a hung parliament or a win for some distance-proper party may want to result in marketplace turmoil. Why the French Election Matters More Than the United Kingdom Vote The European Central Bank (ECB) is worried approximately a capacity sell-off of French government debt, which can affect the whole Eurozone. This situation is why monetary markets are greater focused on the upcoming French parliamentary election than the UK widespread election.  Focus on French Elections The most critical election for financial markets proper now could be the second one spherical of parliamentary balloting in France this Sunday. Last week’s first spherical hinted at a likely hung parliament, which certainly made French belongings upward thrust in price on Monday. Markets pick a hung parliament because each a long way-proper National Rally (RN) and the a long way-left New Popular Front (NPF) need to boom taxes and public spending, which concerns investors.  How French Voting Works In France, if no candidate wins outright inside the first round, a 2d round run-off occurs between the pinnacle candidates and absolutely everyone else who got more than 12.5% of the vote. The candidate with the maximum votes inside the 2nd round wins. Both the NPF and President Emmanuel Macron's Ensemble alliance are running difficult to stop the RN from triumphing. Election Tactics and Challenges Many candidates have withdrawn to help their allies win towards the RN. However, this method might not work due to the fact the conservative Les Republicains haven't given similar instructions to their supporters, which would possibly break up the anti-RN vote. Also, many liberal and conservative electorate may not want to support NPF applicants, especially those from the far-left France Unbowed celebration.  Nervous Market Watch Le Monde, a first-rate French newspaper, estimates that many contests could be tight -way races. The RN is anticipated to win between 250 and 300 seats inside the National Assembly, with 289 wished for a majority. This uncertainty has markets on side, particularly considering President Macron called the election after his birthday party did poorly within the European parliamentary election.  Market Reactions So Far French shares have dropped substantially on account that Macron referred to as the election. The CAC-forty index fell over 6.5%, and important banks like Societe Generale and Credit Agricole additionally saw large declines. French government bonds had been bought off, inflicting their yields to upward push, which indicates accelerated borrowing prices and investor anxiety. Possible Financial Crisis Some analysts fear that France ought to face a monetary disaster much like the UK's mini-price range moment if the election effects cause out of control borrowing. The Euro has additionally been affected, falling in cost however later recuperating slightly. Some analysts trust French belongings may want to nevertheless be valuable if the election results in a hung parliament or a small majority for the RN.  Ongoing Concerns The ECB is so concerned that it'd intervene within the markets to support French authorities’ bonds if wished. France is already in trouble for its high price range deficit, that is better than allowed with the aid of European guidelines. The ECB president, Christine Lagarde, has counselled the ECB could act to ensure financial balance, just like her predecessor did all through the Eurozone disaster in 2012.Overall, economic markets are on high alert, ready to peer the final results of the French election and its capacity effect at the Eurozone's economic stability. Read the full article

[36crypto]

Powell's Comments Impact Crypto Markets as Inflation Fight Continues

Federal Reserve Chair Jerome Powell delivered a crucial message with significant implications for the crypto markets. On the same panel with ECB President Christine Lagarde and Brazil’s Central Bank Governor Roberto Campos Neto, Powell said the Fed has “got quite a way” in its inflation fight. However, he insisted on continuous performance progress, justifying the interest rate…

[notayesmanseconomics]

Can Mario Draghi reform the European economic performance?

The last year or so has seen the leaders of the European Union forced to start to come to terms with the economic under performance of their bloc. In our terms we looked at a facet of this back on February 19th when ECB policymaker Dr. Isabel Schnabel said this. Over the past three decades, a striking gap in the real IT-related capital stock has emerged between the euro area and the United States…

[cambcurrencies]

Chinese Retail Sales, ECB Speech, and GBP/EUR Turbulence

At 2:00 AM, Chinese Retail Sales came out at 3.7% YoY for the month of May, well above the consensus expectation of 3% and above April’s reading at 2.3%. However, compared to last month, this just represents a 0.2% gain, setting a more cautiously optimistic view. Speech by the President Christine Lagarde, will kick off at 10.00 AM. Investors and analysts will pay attention to trying to parse her…

[gqresearch24]

ECB Cuts Interest Rates For First Time In Five Years

(Source – Portfolio Adviser)

On Thursday, the European Central Bank (ECB) lowered interest rates for the first time in nearly five years, marking a significant shift from its previously aggressive stance aimed at combating a surge in inflation. This decision signals a pivotal change in the bank’s monetary policy as inflation nears the ECB’s target of 2 percent. Officials reduced their three key interest rates by a quarter-point, applicable across all 20 eurozone countries, bringing the benchmark deposit rate down to 3.75 percent from 4 percent, the highest in the bank’s 26-year history, where it had been since September.

“The inflation outlook has improved markedly,” stated Christine Lagarde, President of the ECB, during a news conference in Frankfurt. “It is now appropriate to moderate the degree of monetary policy restriction.” However, Lagarde did not provide a clear timeline or number of future rate cuts, leaving some uncertainty in the market.

Global Trend Towards Lower Rates

This move by the ECB follows similar actions by other major central banks around the world. On Wednesday, the Bank of Canada became the first Group of Seven (G7) central bank to reduce rates, with central banks in Switzerland and Sweden also implementing rate cuts recently. These actions reflect a growing consensus among policymakers that the high interest rates used to restrain economies and curb inflation have been effective, and now there is room to lower rates to support economic growth.

In contrast, the United States Federal Reserve remains more cautious, opting to wait for more consistent signs that inflation is under control before considering rate cuts. The Bank of England, however, has indicated potential rate cuts could come as early as this summer, with some officials advocating for easing monetary policy sooner rather than later.

Signs of Stabilizing Inflation in Europe

The ECB’s decision to cut rates for the first time since September 2019 sends a clear message that Europe’s inflation crisis is largely behind it. In late 2022, eurozone inflation peaked at over 10 percent due to soaring energy prices and rising consumer goods costs. Workers also demanded higher wages to offset the impact of inflation.

The ECB responded with its most aggressive rate hike cycle in history, raising the deposit rate from negative 0.5 percent in July 2022 to 4 percent in September 2023. These measures helped reduce inflation to 2.6 percent by May 2024. The decline in energy prices over the past year has been a significant factor in this reduction, along with a decrease in food inflation, which fell from over 12 percent a year ago to below 3 percent.

“Monetary policy has kept financing conditions restrictive,” Lagarde noted. “By dampening demand and keeping inflation expectations well anchored, this has made a major contribution to bringing inflation back down.”

Despite this progress, the ECB remains cautious. While Europe’s benchmark stock index hit a record high before the rate cut announcement, it lost some gains as the bank indicated a careful approach to future rate cuts. The ECB warned that underlying price pressures persist, predicting inflation will remain above the 2 percent target well into the next year. The overall inflation rate is expected to average 2.2 percent next year, slightly higher than the ECB’s projection three months ago. Recent data shows stronger-than-expected inflation, particularly in the services sector, which saw an acceleration from 3.7 percent in April to 4.1 percent in May.

Policymakers are also closely monitoring wage growth, which can lead to higher consumer prices if companies pass on increased labor costs. As Europe navigates this new phase of monetary policy, the ECB’s careful balancing act will be crucial in ensuring sustained economic stability while keeping inflation in check.

[marcedrickirby]

ECB Cuts Rates, Lagarde Press Conference

MARCEDRIC KIRBY FOUNDER CEO.

MARCEDRIC.KIRBY INC.

WELCOME TO THE VALLEY OF THE VAMPIRES

[accapitalmarket]

BoE August cut bets rewind, ECB poised to hold today

UK stocks and the pound were mixed on Wednesday after unchanged inflation data saw a dialling back of bets for an August interest rate cut by the Bank of England (BoE).

The UK consumer prices index held steady at 2.0% in June, defying forecasts for a slight fall, heightening uncertainty around when the BoE will start its easing cycle. The odds of a rate cut in August dropped to 33%, from 49% before the data.

Other UK data showed a sharp acceleration in UK house price in May, with the average home price rising 2.2% year-on-year to £285,000. That marked a rebound from the 1.3% growth in April and continues a trend of rising prices after eight months of decline.

On currency markets, sterling was a beneficiary of the rate cut uncertainty against the US dollar, adding 0.3% at 1.3004. But the pound lost 0.02% versus the euro at 1.1891 having given back earlier gains, with all eyes on the latest European Central Bank (ECB) interest rate decision on Thursday.

After cutting rates at its last meeting, the ECB is expected to leave its benchmark rates unchanged for now, though the focus will be on whether the central bank’s president Christine Lagarde gives any clues about a further rate cut in September.

At the stock market close in London, the blue-chip FTSE 100 index was up 0.3% at 8,187, snapping a two-session losing streak, rallying in the afternoon helped by continuing strength for US blue chips.

But the more domestically focused FTSE 250 index shed 0.6% at 21,093 as investors assessed the new Labour government’s first legislative plans, as outlined in the King’s Speech at the opening of the recently elected Parliament.

Energy issues found support due to gains in oil prices thanks to a weaker dollar and a report that showed a decline in US crude stockpiles. BP was up 1.4% and Shell ahead 0.4%.

Water companies Severn Trent and United Utilities both rallied after recent falls, adding 1.9% and 1.7% respectively. The sector had suffered in the previous session after regulator Ofwat announced an expanded investigation into water companies' management of wastewater treatment works.

And HSBC added 0.41% following news George Elhedery, the global banking giant’s current finance chief would be promoted to chief executive starting in September. He replaces Noel Quinn, whose departure had already been announced.

But on the downside, Antofagasta was the biggest FTSE 100 faller, down 6.1%, after the Chilean miner said it expects full-year copper output at the lower end of its guidance range.

Meanwhile blue-chip insurer Legal & General Group shed 1.5% after analysts at Canadian broker RBC downgraded the stock to sector perform from outperform.

And, on the second line, Genus dropped 10.8% after the animal genetics firm said its 2025 adjusted operating profit would be lower than its earlier forecast.

Disclaimer:

The information contained in this market commentary is of general nature only and does not take into account your objectives, financial situation or needs. You are strongly recommended to seek independent financial advice before making any investment decisions.

Trading margin forex and CFDs carries a high level of risk and may not be suitable for all investors. Investors could experience losses in excess of total deposits. You do not have ownership of the underlying assets. AC Capital Market (V) Ltd is the product issuer and distributor. Please read and consider our Product Disclosure Statement and Terms and Conditions, and fully understand the risks involved before deciding to acquire any of the financial products provided by us.

The content of this market commentary is owned by AC Capital Market (V) Ltd. Any illegal reproduction of this content will result in immediate legal action.

[sridharm-1980]

ECB'S PRESIDENT LAGARDE: JUNE DATA IS KEY FOR THE RATE CUT DECISION.

[bitcoincables]

US Dollar Weakens as Gold and Bitcoin Rise Ahead of NFP Release

In a recent article, the US Dollar is facing pressure as the Federal Reserve and European Central Bank hint at possible rate cuts in the near future. This has led to a steady decline in the US Dollar index, while both Gold and Bitcoin are poised for further gains. Gold has surged to a fresh high, while Bitcoin is looking to re-test its all-time high, driven by factors such as demand-supply dynamics and the upcoming halving event. The market is closely watching the upcoming US Non-Farm Payrolls report for further direction in these assets' prices.

The statements from Fed Chair Jerome Powell and ECB President Christine Lagarde have added to the speculations of impending rate cuts, causing the US Dollar to weaken. Traders are positioning themselves for potential rate adjustments and are closely monitoring the developments in the US job market. The current sentiment in the market suggests a potential further rise in Gold prices as traders anticipate a continued decline in the US Dollar. Similarly, Bitcoin's technical setup indicates a bullish outlook, with the cryptocurrency likely to reach new record highs in the coming days.

As the focus shifts to the upcoming US NFP report, traders are weighing the possible outcomes and adjusting their positions accordingly. The data release will play a crucial role in determining the next moves for the US Dollar, Gold, and Bitcoin prices. With market participants expecting further weakness in the greenback, Gold and Bitcoin could see further upward momentum. The combination of economic data releases and technical factors will guide market movements in the short term for these assets, shaping the trading landscape in the days ahead.

Read the original article here

#USDollar #Gold #Bitcoin #NFP

[influencermagazineuk]

Eurozone Cuts Interest Rate for First Time in Five Years

MEDEF, CC BY-SA 2.0 https://creativecommons.org/licenses/by-sa/2.0, via Wikimedia Commons The European Central Bank (ECB) has announced its first interest rate cut in five years, reducing its main rate from an all-time high of 4% to 3.75%. This decision follows Canada's rate cut earlier in the week, making the EU the second major global economy to lower its lending rate in recent days. The move comes as the ECB reports progress in tackling inflation, coinciding with EU-wide elections that are expected to reflect public discontent over cost-of-living pressures. Christine Lagarde, president of the ECB, stated that the outlook for inflation had "markedly" improved, which facilitated the rate cut. However, she cautioned that inflation would likely remain above the ECB’s 2% target “well into next year,” with forecasts averaging 2.5% in 2024 and 2.2% in 2025. Lagarde emphasized that the ECB would maintain a "sufficiently restrictive" interest rate policy to achieve its 2% inflation target, adding, "We are not pre-committing to a particular rate path." Investment strategist Lindsay James from Quilter Investors noted that the rate cut was anticipated and would provide relief to consumers and businesses in Europe. “The ECB has stolen a march on the Bank of England and Federal Reserve – who are both potentially still a few months away from cutting – and will breathe life into an economy that desperately needs some form of stimulus," she said. Central banks have maintained high rates over the past two years to combat rising prices, with most aiming for an annual inflation rate of 2%. Higher interest rates typically slow economic growth, so the ECB’s rate cut aims to boost economic activity by making borrowing cheaper for consumers and businesses. The ECB’s rate-setting body met in Frankfurt and decided to cut rates despite a slight increase in inflation in May, which rose to 2.6% from 2.4% in April across the 27-nation bloc. This decision follows Canada's rate reduction on Wednesday, which lowered its headline rate from 5% to 4.75% after inflation fell to 2.7%. Sweden and Switzerland have also recently trimmed their rates. Lagarde provided a broader assessment of the eurozone’s economic outlook, expressing increased confidence in the future while acknowledging potential challenges. “The risks to economic growth are balanced in the near term but remain tilted to the downside over the medium term,” she said, citing geopolitical tensions in Ukraine and the Middle East, as well as climate-related issues that could affect food prices. Katherine Neiss, chief European economist at PGIM, expressed confidence that the ECB would likely cut rates further in the coming months, potentially reducing rates to 3.5% or lower by year-end. "Growth is encouragingly recovering from the recession that the euro area went through towards the end of last year, but it's still sluggish," Neiss told the BBC’s Today Programme. Slowing inflation and easing wage growth would support another rate cut, she added. In the UK, interest rates have yet to start decreasing, though there is speculation that the Bank of England might cut rates soon, possibly as early as this month. UK inflation has fallen to 2.3%, significantly down from its peak of over 11% in late 2022. The International Monetary Fund recently suggested that the Bank of England should reduce rates from their current 5.25% to 3.5% by the end of the year. George Godber from Polar Capital commented that the upcoming UK election could influence the Bank of England’s rate decision. "If they cut it'll be political, if they don’t cut it'll be political," he said, highlighting the complexities facing the central bank. Similarly, the US Federal Reserve is also expected to cut rates in the near future, with the latest US inflation figure at 3.4%. The Fed is likely to make its first move on rates before the immediate run-up to voting in November, according to Godber. Read the full article