ECB to Cut by More as Inflation Undershoots Target, Poll Shows
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The European Central Bank will lower borrowing costs more than expected this year to below 2% as inflation is seen undershooting the institution's target in early 2026, according to economists surveyed by Bloomberg.
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Forbes
17 minutes ago
- Forbes
Strategies For Luxury Brands In The Fifth Industrial Revolution
Dr. Gjoko Muratovski is the Chief Academic Officer at the Australian Institute of Advanced Technologies. getty Over the past few years, the European Commission has been developing a policy to define (and regulate) the forthcoming Fifth Industrial Revolution (Industry 5.0) to future-proof European industry. Under this new policy, which is still in the process of development, businesses will be expected to pursue productivity and efficiency but will also be required to place the well-being of the worker at the center of the production process and use new technologies to provide prosperity beyond jobs and growth. Furthermore, Industry 5.0 is expected to complement the existing Industry 4.0 approach by specifically putting research and innovation at the service of the transition to a sustainable, human-centric and resilient industry. This new policy, once enacted, will have a significant impact on both European businesses and international companies interested in operating in Europe. Companies seeking to operate within the European market may need to align with these standards, driving wider adoption of sustainable and socially responsible practices. This could have far-reaching effects on global supply chains, compelling industries worldwide to integrate sustainability into their operations to remain competitive. While this may be disruptive for many businesses, I believe that luxury brands could benefit the most, as they already inherently embody many of these values—that is, if they reframe their value narratives. According to the European Commission, a solely profit-driven approach is increasingly unsustainable. In a globalized world, focusing exclusively on profit overlooks broader environmental and societal costs and benefits. For industry to drive genuine prosperity, its purpose must extend beyond economic gains to include social, environmental and societal responsibilities. This also presents an opportunity for luxury brands to lead through sustainability, resilience and human-centric innovation. To remain competitive and relevant, luxury executives should consider the following strategic actions: 1. Position Sustainable Luxury As A Core Business Strategy Luxury brands are uniquely positioned to embrace sustainable luxury as a competitive advantage and champion sustainability without compromise. Executives should: • Shift from viewing sustainability as a compliance requirement to positioning it as a core brand value. • Leverage luxury's inherent qualities—timeless design, craftsmanship and durability—to promote a sustainable consumption model. • Invest in circular luxury models, such as buy-back programs, upcycling and certified pre-owned markets, to reinforce longevity and exclusivity. • Leverage transparent sourcing and digital verification (e.g., blockchain-backed digital passports) to authenticate ethical materials and practices. 2. Build Resilient And Decentralized Supply Chains Global disruptions highlight the need for localized, adaptable supply chains. To mitigate risks and ensure operational stability, executives should: • Reduce over-reliance on single-source suppliers by diversifying material sourcing and production hubs. • Partner with regional artisans and craftspeople to preserve heritage craftsmanship while enhancing supply chain flexibility. • Reinvest in local craftsmanship by training artisans and embedding high-quality, sustainable production methods in multiple regional markets. • Enhance agility in production by adopting on-demand manufacturing technologies that balance exclusivity with efficiency. • Prioritize sourcing high-quality, sustainable materials from diverse locations to mitigate risks from geopolitical or environmental disruptions. 3. Align Luxury With The Principles Of Industry 5.0 Industry 5.0 calls for a shift from efficiency-driven models to those that balance profitability with purpose. Luxury brands can lead by: • Integrating human-centered innovation, where AI and automation support artisans rather than replace craftsmanship. • Embedding regenerative design into production—using bio-based materials, ethical production methods and waste-reducing techniques. • Developing adaptive business models that allow for flexibility in market shifts, geopolitical tensions and environmental regulations. 4. Reposition Luxury As A Force For Social And Environmental Responsibility Consumers—particularly younger generations—demand brands that align with personal values and social impact. Luxury brands should: • Redefine luxury beyond materialism by emphasizing authenticity, ethical sourcing and conscious consumption. • Engage in purpose-driven storytelling, using brand heritage to reinforce commitments to sustainability and craftsmanship. • Support initiatives that promote fair wages, ethical sourcing and positive social impact within the luxury sector. • Educate consumers on the long-term value of high-quality, sustainable luxury goods versus fast consumption. • Expand access without mass-market dilution, offering sustainable entry-level luxury experiences that maintain exclusivity. 5. Innovate Without Losing Authenticity The future of luxury lies in blending tradition with technological innovation. To maintain exclusivity while embracing modernity, executives should: • Use digital tools for transparency and personalization—for example, leveraging AI for bespoke customer experiences while preserving artisanal craftsmanship. • Develop sustainable innovations, such as bio-based luxury materials or AI-driven customization, while maintaining exclusivity. • Enhance the perceived value of luxury goods by reinforcing their rarity, superior quality and long-term appreciation. • Experiment with sustainable entry-level products without diluting the brand's prestige, ensuring accessibility without mass-market overexposure. Leading By Example The concept of Industry 5.0 presents a transformative opportunity for industries to recalibrate their focus, aligning productivity and efficiency with human-centricity, sustainability and resilience. For luxury brands, this shift offers a unique moment to redefine their value propositions—not merely as symbols of exclusivity, but as leaders in sustainable innovation and responsible production. By embracing the pillars of Industry 5.0, luxury brands can lead by example, promoting a new era of consumption that values quality, longevity and social responsibility. A human-centric approach, deeply rooted in craftsmanship and artisan traditions, is already embedded in the DNA of luxury brands. By emphasizing the skill and artistry behind their products, they align with a vision of the future where technology enhances human well-being rather than displacing it. Similarly, luxury's inherent focus on sustainability—through timeless design and long-lasting quality—positions it well in an era where environmental concerns are paramount. A Challenge And An Opportunity Achieving true resilience requires a shift in business models that prioritize flexibility, local ecosystems and decentralized supply chains. Luxury brands must not only maintain their prestige but also protect authenticity and sustainability by rethinking how they operate and source materials. By doing so, they can serve as a blueprint for a new industry paradigm—one where profitability is balanced with social and environmental responsibility. By embracing Industry 5.0, luxury brands can shape the global conversation on sustainability and equity, setting a new standard for industries worldwide. This is both a challenge and a profound opportunity to redefine what luxury means in the 21st century. Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives. Do I qualify?
CNET
22 minutes ago
- CNET
Mortgage Rates and the Fed: Everything to Know Before Tomorrow's Decision
The Fed's interest rate decisions impact mortgages, but the relationship isn't straightforward. Tharon Green/CNET On Wednesday, the Federal Reserve is expected to extend a pause on interest rate cuts for a fourth consecutive time this year. Though mortgage rates could see some volatility, many economists expect them to stay somewhat flat until the economic picture drastically changes. Rates will stay in the 6.75% to 7.25% range unless the Fed signals multiple cuts soon and backs it up with data, said Nicole Rueth, of the Rueth Team with Movement Mortgage. "Homebuyers waiting on rates to drop drastically might be disappointed," Rueth said. The relationship between the central bank's interest rate decisions and home loan rates isn't direct or immediate. Case in point: The Fed's three interest rate cuts in 2024 didn't translate into cheaper mortgages. The average rate for a 30-year fixed home loan has hovered around 6.8% since late fall. Often, what the central bank says about future plans can move the market more than its actual actions. Mortgage rates are driven by the bond market, investor expectations and a host of other economic factors. "Mortgage rates move on expectations, not announcements," said Rueth. Tomorrow's focus will be on what Fed Chair Jerome Powell says following the meeting. Should Powell express concern over lingering inflation or a reduced number of rate cuts, bond yields and mortgage rates are expected to rise. If he conveys optimism about inflation and suggests further policy easing, mortgage rates may decline. "It's most often the case that longer-term interest rates begin to decline before the Fed cuts rates," said Keith Gumbinger, vice president at Here's what you need to know about how the government's interest rate policies influence the mortgage market. What is the Fed's relationship to mortgage rates? The Fed sets and oversees US monetary policy under a dual mandate to maintain price stability and maximum employment. It does this largely by adjusting the federal funds rate, the rate at which banks borrow and lend their money. When the economy weakens and unemployment rises, the Fed lowers interest rates to encourage spending and propel growth, as it did during the COVID-19 pandemic. It does the opposite when inflation is high. For example, the Fed raised its benchmark interest rate by more than five percentage points between early 2022 and mid-2023 to slow price growth by curbing consumer borrowing and spending. Changes in the cost of borrowing set off a slow chain reaction that eventually affects mortgage rates and the housing market, as banks pass along the Fed's rate hikes or cuts to consumers through longer-term loans, including home loans. Yet, because mortgage rates respond to several economic factors, it's not uncommon for the federal funds rate and mortgage rates to move in different directions for some time. Why is the Fed putting off interest rate cuts? After making three interest rate cuts in 2024, the Fed is now in a holding pattern. With President Donald Trump's unpredictable tariff campaign, immigration policies and federal cutbacks threatening to drive up prices and drag on growth, economists say the central bank has good reason to pause. "The Federal Reserve is in one of the trickiest spots in recent economic history," said Ali Wolf, Zonda and NewHomeSource chief economist. Lowering interest rates could allow inflation to surge, which is bad for mortgage rates. Keeping rates high, however, increases the risk of a job-loss recession that would cause widespread financial hardship. Recent data show inflation making slow but steady progress toward the Fed's annual target rate of 2%. But given the uncertainty surrounding Trump's economic agenda, the central bank isn't in a hurry to lower borrowing rates. 6 Ways to Reduce Your Mortgage Interest Rate by 1% or More 6 Ways to Reduce Your Mortgage Interest Rate by 1% or More Click to unmute Video Player is loading. Play Video Pause Skip Backward Skip Forward Next playlist item Unmute Current Time 0:00 / Duration 2:31 Loaded : 3.93% 0:00 Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 2:31 Share Fullscreen This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Text Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Transparent Caption Area Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Drop shadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset Done Close Modal Dialog End of dialog window. Close Modal Dialog This is a modal window. This modal can be closed by pressing the Escape key or activating the close button. Close Modal Dialog This is a modal window. This modal can be closed by pressing the Escape key or activating the close button. 6 Ways to Reduce Your Mortgage Interest Rate by 1% or More What is the forecast for interest rate cuts in 2025? Though Powell remains noncommittal on any specific time frame, experts now predict an interest rate cut in the fall. "I'm eyeing September for the first rate cut, if inflation keeps cooling and the labor market weakens," Rueth said. However, tariffs are the big wildcard. Rueth said that if a trade war fuels inflation, rates could jump even without a Fed move. Political dysfunction, rising debt and global instability are also a recipe for rate volatility. "The mortgage market reacts fast to uncertainty, and we've got no shortage of it this summer," Rueth said. On the flip side, if unemployment spikes -- a real possibility given rising jobless claims -- the Fed could be forced to implement interest rate cuts earlier than anticipated. In that case, mortgage rates should gradually ease, though not dramatically. Most housing market forecasts, which already factor in at least two 0.25% Fed cuts, call for 30-year mortgage rates to stay above 6.5% throughout 2025. "We might see rates settle into the low to mid-6% by year-end," Rueth said. "But we're not going back to 3%." What other factors affect mortgage rates? Mortgage rates move around for many of the same reasons home prices do: supply, demand, inflation and even the employment rate. Personal factors, such as a homebuyer's credit score, down payment and home loan amount, also determine one's individual mortgage rate. Different loan types and terms also have varying interest rates. Policy changes: When the Fed adjusts the federal funds rate, it affects many aspects of the economy, including mortgage rates. The federal funds rate affects how much it costs banks to borrow money, which in turn affects what banks charge consumers to make a profit. Inflation: Generally, when inflation is high, mortgage rates tend to be high. Because inflation chips away at purchasing power, lenders set higher interest rates on loans to make up for that loss and ensure a profit. Supply and demand: When demand for mortgages is high, lenders tend to raise interest rates. This is because they have only so much capital to lend in the form of home loans. Conversely, when demand for mortgages is low, lenders tend to slash interest rates to attract borrowers. Bond market activity: Mortgage lenders peg fixed interest rates, like fixed-rate mortgages, to bond rates. Mortgage bonds, also called mortgage-backed securities, are bundles of mortgages sold to investors and are closely tied to the 10-year Treasury. When bond interest rates are high, the bond has less value on the market where investors buy and sell securities, causing mortgage interest rates to go up. Other key indicators: Employment patterns and other aspects of the economy that affect investor confidence and consumer spending and borrowing also influence mortgage rates. For instance, a strong jobs report and a robust economy could indicate greater demand for housing, which can put upward pressure on mortgage rates. When the economy slows and unemployment is high, mortgage rates tend to be lower. Read more: Fact Check: Trump Doesn't Have the Power to Force Lower Interest Rates Is now a good time to get a mortgage? Even though timing is everything in the mortgage market, you can't control what the Fed does. "Forecasting interest rates is nearly impossible in today's market," said Wolf. Regardless of the economy, the most important thing when shopping for a mortgage is to make sure you can comfortably afford your monthly payments. More homebuying advice
Bloomberg
22 minutes ago
- Bloomberg
Diesel Prices Surge as Israel-Iran War Further Pressures Market
Diesel prices kept rising on Tuesday as concerns about Middle Eastern supplies — a consequence of the Israel-Iran conflict — piled pressure on an already tight market. The premium of benchmark futures to crude in Europe breached $20 a barrel, the third straight day of sharp gains, fair value data compiled by Bloomberg show. It's a clear sign of traders' concerns about the potential disruption to Middle Eastern exports — a key supply source for the world's biggest petroleum product market.
