Pivotal Days for the Global Economy and Finance
Significant days for the financial economy of various countries are unfolding, and the anticipation for changes in bank interest rates in Europe and the United States will come to an end. Investors and economists have been waiting for the announcement of new policies from the world’s key central banks regarding interest rate changes. This anticipation will conclude with the European Central Bank’s press conference on Thursday, where a new interest rate cut in the Eurozone will be announced and finalized. The 0.25% reduction will bring the interest rate to 3.5%. Experts from financial institutions and leading banks have offered different perspectives on the outlook for the European Central Bank’s decisions until the end of 2024. Some believe that two or even three more cuts are on the way, while others, pointing to the previous decisions of Christine Lagarde, the powerful president of this bank, predict only one more round of cuts. The gradual increases in interest rates in recent years to combat inflation have made money expensive and slowed down the process of obtaining loans. Despite this, shareholders and investors have already factored these interest rate cuts into their investment strategies and capital arrangements. Inflation in Europe has approached 2%, and now, to boost economic growth, money needs to be cheaper. With Lagarde’s official announcement, the European Central Bank has reduced its forecast for economic growth in the Eurozone from 0.9% to 0.8%. Meanwhile, Biden, with an economy growing at 3% and unemployment around 4%, has recorded an impressive track record.
The positive effects of interest rate cuts on capital arrangements in the U.S. have also been preemptively implemented by investors. The promise of interest rate cuts and the good news of stability and strength in the U.S. economy, as announced by Jerome Powell, have focused all attention on the official Federal Reserve meeting next week. Inflation in the U.S. has reached 2.5%, and the strong economic growth of this country, which is the envy of other countries, has assured the Federal Reserve of the U.S. economic conditions, with only the official announcement of the interest rate cut remaining.
Despite the preemptive implementation of these cuts in investment strategies, everyone is waiting for the impact of the interest rate cut news on the U.S. stock markets. What is reflected today in the European Central Bank meeting and Christine Lagarde’s press conference is also of great importance to Americans. Lagarde has always emphasized a scientific and data-driven approach to policymaking, and based on this, any decision regarding interest rates and inflation will be made based on realities and periodic statistics at the central bank meeting.