European Central Bank cuts rates but several data sets point in wrong direction and make further cuts far from predictable
Christine Lagarde, president of the European Central Bank, insists the bank’s confidence in its projections has grown in recent months. Photograph: Alex Kraus/Bloomberg
The joke is that Frankfurt is full of data-driven economists who don’t lose sleep over rising interest rates while the Fed is controlled by more market-sensitive analysts, who do worry about taking the fizz out of equity markets. The Fed also has a wider remit to protect employment.At one point early this year, the Fed was forecast to make up to seven interest rate reductions this year but in the face of stubbornly strong inflation, it may now not even make one.
The euro zone economy has also rebounded more strongly than expected from last year’s reversal, growing by 0.3 per cent in the first quarter . While much of the growth was generated by a bounce back in services, the continent’s troubled manufacturing sector, which has been battered by the surge in energy prices, showed signs of life.
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