Inflation rates have stagnated for much of the past year, leading to increased pressure on policymakers to consider ending easing strategies as rates approach neutral levels. Current market pricing anticipates three or four interest rate cuts before the year's end; however, such adjustments appear irrelevant in the face of escalating North American trade tensions, particularly concerning actions from the Trump administration towards the EU. Despite these pressures, investors seem to have taken the situation in stride, indicating a level of resilience amid uncertainty.
The services and core components of inflation continue to flatline, as they have done for much of the past year, which might embolden hawkish calls for policy changes.
Market pricing for interest rate cuts remains unchanged, suggesting confidence in the current economic environment despite geopolitical tensions influencing market sentiment.
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