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New Normal for The 10 Year will be Around 4.5% Says Tom Orlik
New Normal for The 10 Year will be Around 4.5% Says Tom Orlik

Bloomberg

time3 days ago

  • Business
  • Bloomberg

New Normal for The 10 Year will be Around 4.5% Says Tom Orlik

Bloomberg's Jamie Rush, Stephanie Flanders and Tom Orlik have a new book on the future of interest rates publishing August 8th. It's called 'The Price of Money: A Guide to the Past, Present and Future of the Natural Rate of Interest', and it's a collection of essays by the Bloomberg Economics team. Tom Orlik joins to break down the future for the Fed as well as what the future for the 10 year treasury could be going forward. (Source: Bloomberg)

Euro-area inflation eases but trade woe remains
Euro-area inflation eases but trade woe remains

Observer

time06-04-2025

  • Business
  • Observer

Euro-area inflation eases but trade woe remains

Euro-area inflation has eased further towards the European Central Bank (ECB) target of 2 per cent – which also happens to be the target of the Bank of England (BoE) for the UK – as officials weigh whether to continue lowering interest rates. Consumer prices rose 2.2 per cent from a year ago in March down from 2.3 per cent in February, Eurostat said last week. That matches the median estimate in a Bloomberg survey of economists. Services inflation, a particular focus for policy makers, moderated to 3.4 per cent from 3.7 per cent, extending a retreat that began in February. Underlying price pressures, meanwhile, slowed a little more than anticipated to 2.4 per cent. The ECB will decide whether to reduce borrowing costs for a seventh time since June, with officials now knowing the tariff that Trump has put on the European Union and the affect it would have on prices. Markets pared bets on the extent of further easing this year after Bloomberg reported that several policymakers are wavering on whether to cut again. Investors now see a 70 per cent chance of another move on April 17, down from 85 per cent. The outlook may be clearer shortly now that Trump has made his main tariff announcement, with the ECB also having to assess what a surge in European military spending and a German infrastructure-investment drive will mean for the 20-nation eurozone economy. Bloomberg Economics said there is a case to carry through with a rate cut this month. 'The big picture is one of inflation on track to reach 2 per cent, underlying inflation seemingly declining faster than expected and interest rates approaching neutral territory,' Bloomberg's chief European economist Jamie Rush said. Bloomberg's view seemed to be that the ECB would pause to take stock in April, as it appeared some officials would prefer. Falling services inflation, big tariffs that has been put on autos and any possibility of further tariffs mean a cut is becoming much more likely. ECB President Christine Lagarde, recently said that the US levy of 25 per cent on imports would lower growth in the bloc by about 0.3 of a percentage point in the first year, increasing later due to retaliation. The effect on inflation would be far less certain, though in the near term, a weaker euro exchange rate could contribute to an acceleration of about half a percentage point in price growth, she said. Not all at the ECB agree, with some including France's Francois Villeroy de Galhau playing down the inflationary impact of tariffs and fretting more about the hit to gross domestic product (GDP). Most policymakers have been non-committal with Olli Rehn of Finland reinforcing that stand. 'If the data verifies the baseline and indicates that to reach our goal of 2 per cent symmetric inflation target over the medium term, the right reaction in monetary policy should be to cut in April, we should indeed do so,' he told Politico, according to a transcript on his central bank's website. 'But if data indicates something else, then we would pause.' The central bank's latest quarterly projections foresee a sustainable return to its price goal in early 2026. That forecast rests on workers' pay rises continuing to abate, despite the region's tight labour market. A separate release from Eurostat showed unemployment fell to a record low 6.1 per cent. The latest consumer price data 'reinforces the disinflation process we're in, which is getting closer and closer to the 2 per cent price-stability target', Bank of Spain governor Jose Luis Escriva said. (The writer is our foreign correspondent based in the UK)

Euro-Zone Inflation Revised Down as ECB Ponders Cut or Pause
Euro-Zone Inflation Revised Down as ECB Ponders Cut or Pause

Yahoo

time19-03-2025

  • Business
  • Yahoo

Euro-Zone Inflation Revised Down as ECB Ponders Cut or Pause

(Bloomberg) -- Euro-area inflation slowed more than initially reported in February, strengthening arguments for the European Central Bank to keep cutting interest rates. The Dark Prophet of Car-Clogged Cities Washington, DC, Region Braces for 'Devastating' Cuts from Congress NYC Plans for Flood Protection Without Federal Funds A Malibu Model for Residents on the Fire Frontlines Despite Cost-Cutting Moves, Trump Plans to Remake DC in His Style Consumer prices rose an annual 2.3% — less than the 2.4% Eurostat first flagged. Wednesday's revision follows an unexpected drop in Germany's inflation rate. With the outlook for economic expansion and inflation in Europe clouded by uncertainty, ECB officials debating whether to pause or lower borrowing costs again next month may be tempted to focus on the clear progress in reaching their 2% target. There have been other encouraging signs: Wage growth has moderated, inflation expectations remain anchored and gains in services prices have begun to ease. What Bloomberg Economics Says... 'The broad inflation outlook remains relatively benign. The ECB has already cut its deposit rate by 150 basis points since the cyclical peak and, at 2.5%, borrowing costs are in the vicinity of what we think is neutral. Absent a big surprise, we therefore expect the Governing Council to adopt a more cautious approach to further easing, with the next rate cut coming in June.' —Jamie Rush, chief European economist. Click here for full REACT But there are also risks that inflation will rebound. Trade tensions with the US, and a jump in defense and infrastructure spending could yet drive prices higher more quickly. The ECB already pushed back the timeline for reaching its target to early next year, with President Christine Lagarde arguing that policymakers must be 'extremely vigilant' and agile in responding to data as they arrive. Economists surveyed by Bloomberg still predict two more rate cuts — in April and June — before the deposit rate settles at 2%. Markets are torn on what will happen next month, though they're leaning toward two moves in total before year-end. --With assistance from Barbara Sladkowska, Joel Rinneby and Harumi Ichikura. (Adds Bloomberg Economics.) Tesla's Gamble on MAGA Customers Won't Work The Real Reason Trump Is Pushing 'Buy American' The Future of Higher Ed Is in Austin How TD Became America's Most Convenient Bank for Money Launderers A US Drone Maker Tries to Take Back the Country's Skies ©2025 Bloomberg L.P. Sign in to access your portfolio

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