Latest news with #EuropeanCentralBank
Kuwait Times
43 minutes ago
- Business
- Kuwait Times
ECB expected to hold rates as tariff uncertainty lingers
FRANKFURT: The European Central Bank is set to hold interest rates for the first time in almost a year when policymakers meet this week, despite concerns over the potential impact of higher US tariffs on the eurozone economy. The 26 members of the ECB's governing council will meet just over a week before an August 1 deadline set by US President Donald Trump for the imposition of his government's punitive tariffs. Trump has threatened to triple a basic tariff on imports from the EU to 30 percent if Brussels does not cut a deal by the end of the month, casting uncertainty over the future of transatlantic trade. But the ECB was expected to hold tight on rates instead of preempting the outcome of negotiations, pausing a series of cuts that goes back to September. The central bank has reduced its benchmark rate a total of eight times since June last year and at each of its last seven meetings, bringing it down to two percent. The rapid reduction in rates has come as eurozone inflation has fallen back towards the ECB's two-percent target from the double-digit highs seen in 2022. In June, eurozone inflation sat exactly on the ECB's target and was forecast by officials at the central bank to even out at two percent for the year. The ECB would 'almost certainly leave interest rates unchanged' at the conclusion of its monetary policy meeting on Thursday, analysts from Italian bank UniCredit said in a note. 'The central bank will now want to have more clarity on the trade outlook before it considers adjusting its policy further,' they said. Despite the murky outlook, the ECB was in a 'good place' to deal with what comes next, executive board member Isabel Schnabel told financial news service Econostream Media this month. And with the euro area economy showing some signs of life despite Trump's threats on tariffs, 'the bar for another rate cut is very high', she said. Euro area factory output has grown four months in a row and the bloc's manufacturing PMI—a survey-based measure of manufacturer's overall health—rose in June to its highest level since August 2022. The improving picture painted by recent indicators could, however, be shattered were Trump to follow through with additional tariffs on top of steep existing levies on auto manufacturers, steel and aluminum. The saber-rattling from the Oval Office over trade—and Trump's repeated attacks on the US Federal Reserve's independence—have otherwise had the impact of weakening the dollar against the euro. Were the euro to rise much further it would make matters 'much more complicated', ECB Vice President Luis de Guindos told Bloomberg TV this month. A stronger single currency brought with it the risk of undershooting the ECB's inflation target by making imports cheaper and cooling the economy, while making European exports more expensive. Already, the ECB's forecasts published last month predict inflation to fall to 1.6 percent in 2026, before recovering to two percent the following year. A strong euro meant rate cuts later in the year were a matter of 'when and by how much and not if', ING bank analyst Carsten Brzeski said. The question would get 'more attention' at forthcoming ECB gatherings, Brzeski said, but the uncertainty over US tariffs argued in favor a 'wait-and-see approach'. Trump had upped the threatened level of tariffs on EU exports to the United States since the ECB's last meeting but where they would land after August 1 was uncertain. With the EU locked in talks with Washington to avoid higher tariffs, the necessary 'clarity is unlikely to emerge by next Thursday', UniCredit analysts said. A pause was likely before another cut later in the year, perhaps already in September, the first meeting after the summer, they said. –AFP
New York Times
9 hours ago
- Business
- New York Times
As the Dollar Slides, the Euro Is Picking Up Speed
The chaotic rollout of President Trump's tariffs has prompted investors to question long-held assumptions about the safety and stability of the U.S. dollar, which has plunged in value this year. In the hunt for alternatives, many have turned to the euro. The euro has risen more than 11 percent against the dollar since the start of the year, reaching its highest level in four years, at $1.18. The euro has also gained against other major currencies over that period, including the Japanese yen, British pound, Canadian dollar and South Korean won, suggesting that its strength is more than a reflection of the dollar's weakness. Christine Lagarde, the president of the European Central Bank, said this moment was an opportunity for the euro to gain global clout. 'We are witnessing a profound shift in the global order: Open markets and multilateral rules are fracturing, and even the dominant role of the U.S. dollar, the cornerstone of the system, is no longer certain,' she wrote last week. The dollar's role as the world's reserve currency gives the United States an 'exorbitant privilege' — a term coined begrudgingly by a French politician in the 1960s. Because investors, governments and central banks around the world seek the safe, predictable returns of dollar-denominated assets like Treasury bonds, there is a robust, built-in demand for dollars. That makes it easier for the U.S. government to borrow and boosts the spending power of American consumers. The eurozone, which is made up of the 20 countries that use the euro and rivals the United States in terms of size and wealth, has never attracted investors in the same way. The euro ranks a distant second to the dollar in terms of global use. The euro's recent rise is a major reversal from just three years ago, when it dropped to parity with the dollar because investors feared the damage of surging inflation and Russia's invasion of Ukraine. And it is a world away from the eurozone debt crisis last decade, when at times it seemed like the currency union was at risk of crumbling. As welcome as the euro's recovery from those episodes has been — the euro is trading near a record high against the currencies of dozens of major trading partners — it is also possible to have too much of a good thing. The Euro Rises Up Index of the euro's value against a trade-weighted average of 41 currencies used by the eurozone's biggest trading partners. Source: European Central Bank By The New York Times As money flows into the euro and euro-denominated assets like German government bonds, economists and executives warn that the currency's strength could hurt exporters. They are already contending with Mr. Trump's tariffs making their goods more expensive for buyers abroad as well as increased competition from Chinese rivals in key markets. 'Further euro strength is likely to be self-defeating,' said Valentin Marinov, a currency strategist at Crédit Agricole, a French bank. Exports were already likely to weaken and become a drag on the eurozone economy because of U.S. tariffs and European government policies that would encourage more imports. After a surge in energy prices led to years of fighting to bring inflation down, the European Central Bank, which sets interest rates for the eurozone, now faces the prospect that inflation could be too low. The bank forecasts inflation to average 1.6 percent next year, notably below its 2 percent target. That's partly because of the impact of a strong euro, which makes imports cheaper. Some policymakers have said there is a risk of sluggish inflation becoming entrenched, which is a familiar problem for the region. For nearly a decade until 2021, the central bank kept its key interest rates below zero in hopes of spurring faster economic growth and encouraging prices to rise steadily. That, policymakers hoped, would feed through to higher wage growth and better living standards. E.C.B. officials are expected to keep interest rates steady when they meet this week, but analysts are adding to bets they could cut rates again later this year, if the economic outlook darkens or the euro's strength pushes inflation forecasts even lower. Reducing interest rates tends to weaken a currency, but the euro's recent strength has come, notably, as the E.C.B. cut rates eight times in a year. Luis de Guindos, the vice president of the central bank, said that if the euro climbed above $1.20, that 'would be much more complicated.' Some big European companies have warned about the effect of the strong currency on their earnings, especially in export-heavy Germany. SAP, a software firm that recently became Europe's most valuable public company, said that every one-cent increase in the euro-dollar exchange rate results in a 30 million-euro decline in revenues, without currency hedges. Adidas, the sportswear brand, said that a strong euro has 'negative translation effects' on its overseas sales. Daimler, a truck maker, said that fluctuations on the euro-dollar rate 'could significantly impact' its financial performance. Where the euro goes next is hard to predict. It is currently trading at around $1.17, and analysts surveyed by Bloomberg expect it to continuing strengthening, to $1.21 next year. But Mr. Marinov of Crédit Agricole said he believed that traders had gotten ahead of themselves: He expects the euro to fall back toward $1.10 next year. The currency's rally this year does not necessarily mean there will be a lasting shift toward the euro, in which it accounts for a larger share of central banks' reserves or is used in more cross-border payments. Ms. Lagarde of the E.C.B. said that seizing the moment for a 'global euro' would take a concerted effort to bolster the bloc's fragmented economy, streamline its governance and deepen its capital markets, among other things. 'A step towards greater international prominence for our currency will not happen by default: It must be earned,' she said.
Irish Examiner
11 hours ago
- Business
- Irish Examiner
Pause in ECB rate cuts anticipated amid uncertainty and steady inflation
The Governing Council of the European Central Bank will meet this week, with a pause in rate reductions largely anticipated after seven consecutive cuts in response to falling inflation. Policymakers will gather in Frankfurt on Thursday to consider the performance of the 20-country eurozone amid tariff threats from US President Donald Trump and ongoing political turmoil. After a total eight quarter-point moves that have brought the deposit rate to 2%, ECB President Christine Lagarde said last month that the cutting cycle is nearing its end, with the bank's deposit facility now at 2%. Inflation across the eurozone crept up marginally in June, rising to the ECB's target of 2%, up from 1.9% a month earlier, as energy and industrial goods continued to pull down prices, offsetting quick services inflation. Underlying inflation, a closely watched measure that excludes volatile food and fuel prices, meanwhile held steady at 2.3%, in line with expectations. Policymakers reckon they are well-positioned to sit out the elevated uncertainty, with borrowing costs at neutral levels that neither restrict nor spur economic activity. A key indicator of the influence rates are exerting will arrive on Tuesday with the ECB's quarterly Bank Lending Survey, the first since Trump unveiled his levies in April. Worried about growing risks, banks previously reported tighter credit standards, however, ECB Executive Board member Isabel Schnabel has said the last poll revealed a stimulative effect as lower borrowing costs boosted demand for mortgages. Speaking on the upcoming decision, Daragh Cassidy on said: "After seven consecutive rate cuts, and eight in total since last June, it's almost a given that the ECB will keep rates on hold at its next meeting. "Inflation is now pretty much bang on target at 2%. And with the ECB's key policy rate also at 2%, it's close to the level that's considered neutral for the Eurozone economy. "However, one further rate cut later in the year is still on the cards, probably in September. But the impact of Trump's tariffs on the Eurozone and global economy is creating huge uncertainty and making the outlook incredibly hard to forecast. "If the tariffs drag down Eurozone growth, or trigger a recession, the ECB could be forced to cut rates even further. We just don't know at this stage how it's going to all play out. But for now, the ECB is likely to keep rates on hold and adopt a 'wait-and-see' approach."
Mid East Info
13 hours ago
- Business
- Mid East Info
ECB PREVIEW: rates unchanged as tariff deadline approaches
By Daniela Sabin Hathorn, senior market analyst at As the European Central Bank ECB prepares for its upcoming policy meeting on Thursday, expectations are low for any fresh policy action. Having led its global peers in the early stages of the rate-cutting cycle, the ECB now appears ready to pause, adopting a more cautious, data-dependent stance amid global uncertainty and fragile growth dynamics. Early Mover, Now Steady Hand: The ECB has shown confidence in front-running rate cuts compared to other major central banks like the Federal Reserve and the Bank of England. That decisiveness appears to have paid off. Inflation in the eurozone, though fluctuating slightly in recent months, remains broadly stable around the 2% target. Meanwhile, the bloc has managed to bounce back from a string of disappointing growth prints last year, signalling that policy support has helped stabilize the region's recovery. With the deposit rate currently at 2%, ECB policymakers have repeatedly signalled they are in a comfortable place. There is little urgency to deliver additional cuts unless a new shock materializes. As President Christine Lagarde has suggested in recent remarks, the central bank is in 'wait and see' mode—a sentiment expected to dominate Thursday's meeting. Tariff Risks Loom Large: If there is one external risk that could prompt a policy rethink, it's the growing threat of a trade standoff between the U.S. and EU. As the August 1st deadline for a decision on new tariffs approaches, speculation is mounting that the U.S. may impose 30% levies on certain European goods—well above the 20% worst-case scenario previously modelled by the ECB. While such a move is still not a given, it would be a significant escalation in trade tensions and could deliver a sizable hit to eurozone growth. In that scenario, further monetary easing might be back on the table. However, with the ECB meeting set before the tariff deadline and no substantial progress in negotiations yet, policymakers are unlikely to pre-emptively react. This points to a muted, possibly uneventful meeting, with no change in policy but a reiteration of the ECB's readiness to act if conditions deteriorate. Inflation Watch and Communication Strategy: Even with subdued expectations, markets will parse every word from Lagarde carefully. The ECB will likely reaffirm its dual commitment: supporting the recovery while remaining vigilant against inflationary risks. That balancing act is increasingly important, especially if tariffs start pushing up prices through supply chain disruptions and cost pass-through effects. The message is likely to be measured—acknowledging risks without sounding alarmist. For markets, that may come across as a 'boring' meeting, but in the current climate of uncertainty, predictability could be just what investors need. EUR/USD Outlook: Seeking Direction From a market perspective, the euro has struggled in recent days amid renewed U.S. dollar strength. However, technical indicators suggest a potential base is forming. Support appears to be building around key moving averages, and with the dollar showing signs of fatigue, this week's ECB meeting could mark a turning point for euro bulls—assuming the central bank sticks to its current supportive stance and no new surprises arise. A sustained move above 1.18 in EUR/USD would confirm the bullish trend that has been in place since early 2025. Conversely, a drop below the 1.16 level would undermine the upward momentum and raise questions about market conviction. However, unless the ECB introduces new dovish elements, the bias remains for consolidation or mild upside, especially if global risk sentiment stabilizes. EUR/USD daily chart: Past performance is not a reliable indicator of future results. Conclusion: A Pause with a Watchful Eye This week's ECB meeting is unlikely to deliver fireworks. But in a macro environment clouded by trade threats and lingering inflation concerns, stability might be the central bank's most powerful message. Barring a major tariff shock, the ECB is poised to hold rates steady, reinforce its 'wait and see' stance, and leave the door open for action—if and only if the data demands it.
Yahoo
16 hours ago
- Business
- Yahoo
The Zacks Analyst Blog Highlights Alphabet, Tesla, Coca-Cola, IBM and Philip Morris
For Immediate Release Chicago, IL – July 22, 2025 – announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Alphabet GOOGL, Tesla TSLA, Coca-Cola KO, IBM IBM and Philip Morris International PM. Here are highlights from Monday's Analyst Blog: Q2 Earnings Season Ramps Up: Global Week Ahead What's going on in the Global Week Ahead? · Q2 earnings season ramps up, as global PMI's show trade uncertainty effects · The U.S. President's pressure on the Fed Chief stays on the watch list · The European Central Bank (ECB) holds its pre-summer break policy meeting · Japan votes, and · Turkey's central bank meets, against a backdrop of domestic political uncertainty Next are Reuters' five world market themes, re-ordered for equity traders— (1) Q2-25 S&P500 Earnings Season Ramps Up U.S. corporate earnings season kicks into high gear with market heavyweights Alphabet andTesla leading the charge. Q2 results have started flowing in, with major banks expressing optimism about the investment banking outlook for the rest of the year after dealmaking rebounded. More than one-fifth of S&P500 companies are expected to report in the coming week. Google parent Alphabet and Tesla are the first of the "Magnificent Seven" mega-caps to report this period, while results are also due from Coca-Cola, IBM and Philip Morris International. S&P500 earnings are expected to have climbed +6.5% in the quarter from the year-ago period, according to LSEG IBES data as of Wednesday. (2) July Purchasing Manager Indices (PMIs) arrive July surveys of business activity across the globe may capture some immediate shifts in behavior in both services and manufacturing in response to Trump's new Aug. 1st tariff deadline. Global factory activity has struggled to remain in expansionary territory in the last year. Out of 34 of the world's largest economies, 22 have slowing activity — leaving the services sector to do much of the heavy lifting. But that's also starting to show the strain from the uncertainty for anyone from retailers, to hairdressers and accountants, from President Trump's chaotic tariff policy. In June, services activity in the United States, the euro zone, China and Germany was slower than in December and well below last June. Among richer nations, only Japan and Britain saw a year-on-year improvement in service-sector activity last month, and even that was modest at best. (3) On Thursday, the European Central Bank (ECB) Meets The ECB is set to pause on Thursday after eight consecutive rate cuts that halved its policy rate to 2.0%. The threat of a 30% U.S. tariff looms over the euro zone. But there's little that's certain about the scale of trade restrictions that will end up prevailing, so the ECB has no reason to move the dial yet. Policymakers will be reluctant to create the sense that they are reacting to a threat. But they will have to reassess their worst-case scenario from June, which foresaw a lower tariff level. Also, the focus isn't on Thursday's decision — but what comes next. Given the scale of uncertainty, traders are unsure. They fully price one more rate cut by year-end, but the timing is up in the air, with a September move seen as a coin toss. (4) Japan's Upper House Election Happens Much is riding on Sunday's Japan upper house election, which could, at least in the near- to mid-term, shape the fiscal and policy trajectory for one of the world's most indebted nations. Polls suggest Japan's ruling coalition will likely lose its majority, with fiscal hawk Prime Minister Shigeru Ishiba potentially stepping down. Longer-dated Japanese government bond yields have scaled new highs as concerns about the deteriorating fiscal outlook grow, following promises of tax cuts and fiscal largesse by opposition parties. Their preference for keeping interest rates low also complicates the Bank of Japan's plans to normalize monetary policy. And while expectations are that trade talks between Tokyo and Washington could make further progress once the election is over, the clock is ticking to an Aug. 1st deadline, when Japan will face 25% tariffs. (5) On Thursday, Turkey's Central Bank Likely Returns to Rate Cuts Turkey's central bank is expected to return to rate cuts on Thursday, back on track after market turmoil following an unprecedented crackdown on the CHP opposition party clouded the monetary policy outlook. The March detention of Istanbul Mayor Ekrem Imamoglu — seen as President Tayyip Erdogan's most formidable rival — roiled markets, knocked the lira to a record low, saw stocks trading suspended and prompted the central bank to hike overnight rates to 46% — short circuiting an easing cycle that had only begun in December. A Reuters poll showed expectations for a 250-basis-point cut, with some predicting as much as 350 bps. But there's some uncertainty over the speed and scale of easing with markets nervous against the backdrop the opposition crackdown recently accelerating. Central banks in Hungary and Russia also hold rate meetings in the coming week. Research Chief Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months. Free: See Our Top Stock And 4 Runners Up Zacks Investment Research 800-767-3771 ext. 9339 support@ Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit for information about the performance numbers displayed in this press release. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report International Business Machines Corporation (IBM) : Free Stock Analysis Report CocaCola Company (The) (KO) : Free Stock Analysis Report Philip Morris International Inc. (PM) : Free Stock Analysis Report Tesla, Inc. (TSLA) : Free Stock Analysis Report Alphabet Inc. (GOOGL) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
