The ECB cut the EU’s official interest rate yesterday from 4% to 3.75%. The Bank of England is expected to follow the steps on its next meeting. Although the ECB mentioned that "The Governing Council is not pre-committing to a particular rate path”, it is somehow expected to continue lowering rates in the following months. One interesting factor to point out is that the oficial inflation expectations of the ECB assume CPI will remain above the 2% target for 2025, only or recede to the target on 2026 (see table below). This is important because if the Fed can relax a little bit the inflation target, they will be able to cut rates this year. Today, the U.S. unemployment is published, right on time for the FOMC meeting next week, where the Fed is not expected to cut rates, but may indicate a potential path for the second half of the year.
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