ECB and US Fed get to work
Both the eurozone and the USA are set for a series of interest rate cuts in the fall. Although the latest inflation data has not yet given the all-clear, overall it points in the right direction. Other economic data also supports expectations for interest rate cuts. In the eurozone, the economy is recovering slowly, while in the USA there are increasing signs of a noticeable slowdown in the labor market. As a result, the decision-making guidelines for the two central banks have become clearer. We expect both the ECB and the US Fed to cut interest rates by a total of 75 basis points by the end of the year. Further rate cuts should then follow in 2025.
A new Donald Trump presidency poses risks. The announcement to raise US tariffs would lead to trade conflicts and thus to uncertainty globally. In the US it would increase inflation risks. The extent of this will probably also depend on the majorities that emerge in both chambers of the US Congress after the elections. There are many possible variations in the distribution of power after the US elections and therefore the consequences. So far, the markets have been calm, but the potential for reactions is certainly there.
As always, in this Interest Rate Outlook we present our expectations for both central banks, the ECB and the US Fed, as well as for the respective government bond markets in the eurozone and the US in compact form. We also focus on two economic policy issues that could come under the spotlight in the wake of the US elections: The future trade policy under Donald Trump and the US federal budget.
This document is intended as an additional information source, aimed towards our customers. It is based on the best resources available to the authors at press time. The information and data sources utilised are deemed reliable, however, Erste Bank Sparkassen (CR) and affiliates do not take any responsibility for accuracy nor completeness of the information contained herein. This document is neither an offer nor an invitation to buy or sell any securities.
Recommended Content
Editors’ Picks
![EUR/USD holds ground above 1.1050 as USD struggles](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/EURUSD/world-currencies-53475296_XtraSmall.jpg)
EUR/USD holds ground above 1.1050 as USD struggles
EUR/USD is holding gains above 1.1050 in the European trading on Monday. A pause in the US Dollar recovery helps the pair stay afloat even though markets appear cautious ahead of key US employment data releases later this week. US Labor Day-led thin trading will likely extend.
![GBP/USD stays firm near 1.3150 amid light trading](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/GBPUSD/iStock-1078115946_XtraSmall.jpg)
GBP/USD stays firm near 1.3150 amid light trading
GBP/USD remains bid near 1.3150 in the European session on Monday amid the US Labor Day-led thin liquidity. In the absence of top-tier economic data releases from the UK this week, the US Dollar price dynamic will be the main driver for the GBP/USD.
![Gold trades in tight range as upside looks capped by USD recovery](https://editorial.fxstreet.com/images/Markets/Commodities/Metals/Gold/safe-investment-gm147311616-17537479_XtraSmall.jpg)
Gold trades in tight range as upside looks capped by USD recovery
Gold (XAU/USD) continues trading in a familiar range just above $2,500 on Monday even as Asian stocks fall due to China-growth fears following the release of mixed Manufacturing Purchasing Managers Index (PMI) data.
![Tron price is set for a decline as technical indicators show bearish momentum](https://editorial.fxstreet.com/images/Markets/Currencies/Cryptocurrencies/Tokens/TRON/tron_XtraSmall.jpg)
Tron price is set for a decline as technical indicators show bearish momentum
Tron (TRX) retested its resistance barrier and declined 6.1% last week. In the Asian session on Monday, it trades at $0.1557. Tron's price action suggests a decline ahead, as the bearish divergence in technical indicators shows.
![Week ahead: US labour data and the BoC rate announcement in focus](https://editorial.fxstreet.com/images/Macroeconomics/EconomicIndicator/Employment/NFP/working-america-gm173864680-9188844_XtraSmall.jpg)
Week ahead: US labour data and the BoC rate announcement in focus
With US Federal Reserve Chair Jerome Powell’s recent speech at the Jackson Hole Symposium confirming that it is time to begin easing policy as well as underlining the importance of the jobs market, this week’s jobs data may help determine how the Fed approaches its easing cycle.
![Moneta Markets review 2024: All you need to know](https://editorial.fxstreet.com/images/IT/Testing/Review/FXSBadgeCertifiedBackg_XtraSmall.png)
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.