European Central Bank

With US President-elect Donald Trump threatening new tariffs and political chaos engulfing France, the European Union's second largest economy, the question ahead of the European Central Bank meeting Thursday is not whether it will cut interest rates, but by how much. Analysts see a quarter-point rate cut from the current ECB benchmark rate of 3.25% as the most likely option when the bank's rate-setting council meets at its skyscraper headquarters in Frankfurt. But the prospect of a half-point cut isn't out of the question for the bank and its President Christine Lagarde as new risks that emerged since the bank's last meeting on October 17 cast a shadow over an already tepid recovery from a post-pandemic stagnation. Trump's election victory on Nov. 5 heightened the prospect of a more protectionist U.S. trade policy, such as new or higher tariffs on imported goods, after he takes office on Jan. 20. That sends a cold chill through the business world in Europe, where exports are an ...

The ECB cut rates for the third time this year in October and made clear that further easing is coming given a weak economy and diminishing price pressures

But the pace of any deregulation will be determined by new regulators and key policymakers that Trump has yet to nominate, leaving the outlook highly uncertain

"The incoming information on inflation shows that the disinflationary process is well on track," the ECB said in a statement

The reason why the RBI till the August policy had its feet on the brakes is its assessment of inflation risks

Whatever happens, a sustained period of central bank activism, in contrast to the recent hiatus of higher-for-longer rates, is likely to take hold

Economists think the most she will do is keep the door open to another cut in October by saying that all meetings, including the next one, are 'live'

Inflation in the 20 European Union countries that use the euro fell sharply to 2.2 per cent in August, opening the door for the European Central Bank to cut interest rates as the ECB and the US Federal Reserve prepare to lower borrowing costs to support growth and jobs. The August figure was down from 2.6 per cent in July, according to figures on Friday from European Union statistics agency Eurostat. Energy prices fell in August by 3 per cent, helping lower the overall figure, while inflation fell to 2 per cent in Germany, the eurozone's largest economy. The monthly figure is now close to the ECB's target of 2 per cent, the level considered best for the economy. The central bank is charged with maintaining stable prices under the treaty that set up the European Union. Not all of the EU's 27 countries use the euro. Economists expect the ECB to cut its key rate by a quarter point from 3.75 per cent at its September 12 meeting, while the Fed is expected to cut rates from a 23-year high

With global markets lined up for quick-fire US rate cuts, the ECB signalled heightened concerns about volatile inflation, helping to sustain an upward shift for the euro

ECB came out with a balanced message following Thursday's meeting, arguing that corporate profits were absorbing some price pressures but risks remained

ECB cut rates in early June but made no commitment about any further moves, arguing inflation was still too high

The euro fell by as much as 0.6 per cent to a one-month low of $1.0733 and hit a 21-month trough against sterling of 84.49 pence

A 41 per cent plurality of economists expect the US Fed to signal two cuts in the closely watched dot plot, while an equal number expect the forecasts to show just one or no cuts at all

Non-deliverable forwards indicate rupee will mostly be flat from 83.4725 in the previous session

IMF spokesperson Julie Kozack also told a regular news briefing that the US economy needs to slow in 2024 and the Fed should remain cautious in cutting rates

The shifting Fed expectations lifted oil prices and dragged Treasury yields to their lowest in two months after data this week hinted the US labour market was easing

ECB policymakers led by President Christine Lagarde have insisted they're comfortable plowing a separate furrow from the Federal Reserve

HSBC's exit from Russia has been on the cards since February, when Russian President Vladimir Putin gave approval for the asset sale to privately owned Expobank to go ahead

ECB policymakers needed to keep rates in restrictive territory this year to ensure that inflation kept easing

Panetta has said inflation is showing a common underlying trend as it is declining in all major economic areas and that risks to financial stability have reduced