INTEREST RATES
The ECB finds the way down again!

What happened?
Don’t fix your mortgage rate yet… because the ECB might be cutting interest rates next meeting! While the Fed is not ready to cut interest rates in the US, Olli Rehn and Philip Lane of the ECB indicated that the ECB will most likely cut interest rates next week.

The inflation rate in the Euro area held steady at around 2.4% over the past few months, while the target rate for the ECB is a little below 2%.

Why is it important?
This rate cut will signal the end of high inflation, which peaked in the eurozone at around 14%. Lower interest rates indicate that borrowing will be cheaper and therefore, more money will flow into the economy, leading to economic growth.

Another interesting point here is that normally the Fed takes the lead in global monetary policy. However, it does not seem that the Fed is ready to cut interest rates yet. Hence, it looks like we are seeing a decoupling of the two most important central banks in terms of monetary policy.

What’s next?
This Friday, the latest inflation data for the Eurozone will be published, and on the sixth of June, the ECB Board meeting will decide if there will actually be a quarter percent rate cut.