Decisive Days for the Global Economy and Finance
Significant days are unfolding for the financial economy of various countries as the anticipation for changes in bank interest rates in Europe and the United States comes to an end. Investors and economists have long 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 prominent banks have provided various outlooks on the European Central Bank’s decisions until the end of 2024. Some believe that two or even three further cuts are on the way, while others, referring to the previous decisions of Christine Lagarde, the powerful president of this bank, predict only one more cut. The incremental increases in interest rates in recent years to combat inflation have made money expensive and slowed down the process of obtaining loans. Nevertheless, shareholders and investors have already factored in these interest rate cuts in their investment strategies and capital arrangements. Inflation in Europe has approached 2%, and now, to stimulate economic growth, money needs to become cheaper. With Lagarde’s official announcement, the European Central Bank has revised its economic growth forecast for the Eurozone from 0.9% to 0.8%. Meanwhile, Biden has recorded an impressive performance with an economy growing by 3% and unemployment around 4%.
The positive effects of interest rate cuts on capital arrangements in the United States have also been preemptively implemented by investors. The promise of interest rate cuts and the assurance of the stability and strength of the U.S. economy, as announced by Jerome Powell, have turned all eyes to the Federal Reserve’s official 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 nations, has assured the Federal Reserve of the U.S. economic conditions, leaving only the official announcement of the interest rate cut.
Despite the preemptive implementation of this reduction in investment strategies, everyone is waiting to see the impact of the interest rate cut news on 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, every decision regarding interest rates and inflation will be made based on realities and periodic statistics at the Central Bank meeting.