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ECB Nearly Or Already at the End of Easing Cycle, Kazimir Says

ECB Nearly Or Already at the End of Easing Cycle, Kazimir Says

Bloomberg4 days ago

The European Central Bank is nearly, if not already, at the end of its cycle of interest-rate cuts, according to Governing Council member Peter Kazimir.
'Looking ahead, I continue to see clear downside risks to growth, and there is also uncertainty about future price developments,' Kazimir, who is also Slovak central bank governor, said in an op-ed published on Monday.

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Commentary: How Trump could get the lower rates he seems to desperately want
Commentary: How Trump could get the lower rates he seems to desperately want

Yahoo

timean hour ago

  • Yahoo

Commentary: How Trump could get the lower rates he seems to desperately want

It would be fun to be Federal Reserve Chair Jerome Powell—for about 15 minutes. Powell and the Fed have faced relentless bashing from President Trump, and now Vice President JD Vance has joined Trump in a tag-team match against the central bank. After the May inflation data showed prices largely under control, Vance attacked the Fed for refusing to lower interest rates. "The president has been saying this for a while, but it's even more clear: The refusal by the Fed to cut rates is monetary malpractice," Vance posted on social media. Nice alliteration, but Vance is wrong. The Fed is monetarily motionless for good reason, which everybody involved with financial markets understands. Inflation is down but probably going back up, and Trump himself is the reason. The new tariffs Trump has been imposing on imports will directly raise the cost of some $3 trillion worth of products Americans buy every year. Higher consumption taxes = higher prices = higher inflation. Lowering interest rates would be stimulative, and more spending might make the coming Trump inflation spurt worse, not better. If a plainspoken person were to impersonate Powell, he might say this: "Dear Mr. President, if you'd repeal all of your tariffs, the Fed would be happy to cut interest rates right away." That would be the fun part—cutting through Trump's doublespeak and putting the blame for higher interest rates squarely on him, where it belongs. Then the fun would abruptly end. The notoriously touchy Trump obviously hates criticism and doesn't want anybody to correct him, even the world's most powerful banker. Trump has already threatened to fire Powell for not lowering rates. Trump probably lacks the authority to do that, and markets would rebel. Yet part of Powell's job is to keep markets calm, not roil them by provoking a combative president. Read more: How much control does the president have over the Fed and interest rates?Trump's problem is that he wants two incompatible things: tariffs and loose monetary policy. The Fed already has a credibility problem for waiting too long to attack inflation as it drifted higher in 2021 and 2022. Powell is trying to rehabilitate the Fed's reputation, and he clearly doesn't want to make the same mistake in a different way. Cutting rates at the onset of another inflationary cycle everybody sees coming would be monetary madness. Trump's tariffs probably won't cause inflation as severe as former President Joe Biden had to deal with in 2022, when the inflation rate hit 9% and gasoline prices crested $5 per gallon. But they'll push prices up by enough to keep the Fed on its toes. Most economists think Trump's tariffs will boost inflation from 2.4% now to around 3.5% or 4% by the end of 2025. Read more: 5 ways to tariff-proof your finances In an alternate universe with no Trump tariffs, the Fed might already be cutting interest rates. It started cutting short-term rates last September and brought them down by a full percentage point within three months. It was ready to keep going. At the start of the year, investors put the odds of a Fed rate hike by late June at about 77%, according to the CME FedWatch tool. Those odds now are less than 3%. Many forecasters now think the Fed won't cut rates until the end of the year, and then only if tariff-induced inflation seems relatively mild and short-lived. Powell himself has spelled this out in his usual Fedspeak. "If the large increases in tariffs that have been announced are sustained, they are likely to generate a rise in inflation, a slowdown in economic growth, and an increase in unemployment," the Fed chair said in May. "Our obligation is to keep longer-term inflation expectations well anchored and to prevent a one-time increase in the price level from becoming an ongoing inflation problem." Trump's own advisers, including Treasury Secretary Scott Bessent, understand how the Fed operates, and they're probably telling Trump as much. But Trump, as always, is playing a double game. While he truly does want lower rates, he also wants ready villains so if something goes wrong, he can say, "See, I was telling you all along. The Fed is screwing everything up." The bigger threat to the economy at the moment is Trump's tariffs, not the level of interest rates. If Trump unwound his trade war tomorrow, most Americans would benefit because tariff-induced price hikes would disappear and the Fed would be able to start cutting rates. But Trump won't do that, so the next best thing, to him, is tariffs with a side dish of monetary mewling. Rick Newman is a senior columnist for Yahoo Finance. Follow him on Bluesky and X: @rickjnewman. Click here for political news related to business and money policies that will shape tomorrow's stock prices. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

Dollar Hits Multiyear Lows
Dollar Hits Multiyear Lows

Wall Street Journal

time4 hours ago

  • Wall Street Journal

Dollar Hits Multiyear Lows

The dollar sank to its weakest level in years, losing ground against the euro, Japanese yen and other currencies. The WSJ Dollar Index traded as low as 94.48, the lowest intraday level since July 2023, according to Dow Jones Market Data. That gauge and the U.S. Dollar Index were recently both on pace to settle at their lowest levels in years. The euro surged above $1.16, and was on course for its strongest end-of-day level since October 2021.

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