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Major forecasts: Divergence
With no slowdown in sight for the US economy, the Fed will need to see several months of even slower price data before cutting rates. September is probably too soon, and we now expect the first US cut in December whereas the ECB will start in June. Chairman Powell outlined the Fed's reaction function at their latest post-meeting press conference. To start lowering rates they need either more confidence on inflation returning to 2% or an unexpected weakening in the labour market. We don’t see either happening in the near future and therefore do not expect the first rate cut to come before after the election, in ... (full story)