Inflation in the Eurozone has dipped to 2.4% in February, offering fresh support for a potential interest rate cut by the European Central Bank (ECB). While the reduction signals progress in the fight against inflation, questions remain over how far the ECB will go in lowering borrowing costs, especially given Europe’s sluggish growth.

Key Figures and Trends

According to Eurostat, the annual inflation rate in the 20 countries using the euro currency dropped slightly from 2.5% in January to 2.4% in February. This decline was largely driven by falling energy prices. Notably, France saw a remarkably low inflation rate of just 0.9%, which further highlights the region’s cooling inflationary pressures.

The February figure strengthens the argument that the ECB is succeeding in its primary goal of bringing inflation closer to its 2% target. With inflation on a downward trajectory, the central bank is now shifting focus to supporting the eurozone’s tepid growth, which has been a growing concern.

ECB Rate Cut Expected

Market analysts are widely expecting the ECB to lower its benchmark interest rate by 0.25 percentage points to 2.5% at its upcoming meeting on Thursday. This would be a move to stimulate borrowing and spending in a fragile economy. A rate cut typically lowers borrowing costs, making it easier for businesses to expand and individuals to secure loans for home purchases.

While a rate reduction was already anticipated, the recent inflation data has strengthened the case for it.

Economic Growth Challenges

Growth in the eurozone has been weak, with the economy stagnating in the final quarter of 2024. Consumer caution, still lingering from the inflation surge, and business concerns over potential tariffs on exports to the U.S. under President Donald Trump have dampened spending. Additionally, political instability in key countries—such as France’s lack of a parliamentary majority to tackle a growing budget deficit, and the political transition in Germany after its February election—has added to the uncertainty.

Recent data from S&P Global’s purchasing managers’ surveys indicated that the eurozone economy barely grew in February, highlighting ongoing struggles.

The Big Question: How Far Will the ECB Go?

Thursday’s meeting will likely focus on whether ECB President Christine Lagarde will provide guidance on the future path of interest rates. While inflation has significantly decreased from its peak of 10.6% in October 2022, some price pressures persist. Service costs—covering everything from haircuts and hotel stays to medical care—remain elevated, holding steady at 3.7%.

In its January meeting, the ECB maintained that its high benchmark rate was still restrictive for growth. If that language is omitted in Thursday’s meeting, it could signal that the ECB might be approaching the limit of its rate-cutting cycle.

Changing Economic Landscape

Recent comments from Isabel Schnabel, a key member of the ECB’s executive board, suggest that the bank may not be able to continue cutting rates aggressively. Schnabel noted that the “neutral rate”—the point at which monetary policy neither stimulates nor restrains the economy—has likely risen in recent years, making it harder for the ECB to pursue deep rate cuts.

Schnabel’s remarks indicate that risks to inflation are shifting. While inflation may be under control for now, the dynamics of the global economy may prevent the ECB from further easing in the near future.

Conclusion

As the ECB prepares for its meeting on Thursday, the latest inflation data presents a mixed picture. While inflation is moderating, growth concerns persist, and the ECB faces the challenge of balancing rate cuts with the broader economic outlook. The coming months will reveal how far the ECB is willing to go in supporting Europe’s economy while ensuring inflation stays under control.

Source

The post Eurozone Inflation Drops to 2.4%, Boosting Chances of ECB Rate Cut appeared first on Journos News - Breaking News, World News, Top Stories, Todays Headlines and Flash Reports.

NEW YORK (AP) — U.S. stocks ended with mixed results on Wednesday as a recent inflation report raised expectations of an interest rate cut by the Federal Reserve next month.

The S&P 500 was nearly flat, inching up less than 0.1%, following its first decline since last week’s post-Election Day rally. Meanwhile, the Dow Jones Industrial Average gained 47 points, or 0.1%, and the Nasdaq composite slipped by 0.3%.

Bond Market Reaction and Rate-Cut Expectations

The bond market also showed mixed results. Consumer inflation increased from 2.4% to 2.6%, as economists expected. However, “core inflation” (which excludes volatile categories like food and energy) remained steady, an indicator of long-term trends that economists say is more predictive. This stability strengthened expectations for a December rate cut.

“Bang in-line core inflation leaves the Fed on track to cut rates in December,” said Lindsay Rosner, head of multi-sector fixed income at Goldman Sachs Asset Management.

Since September, the Federal Reserve has gradually reduced interest rates from a two-decade high to support the job market and bring inflation near its 2% target. After the last rate cut in October, traders now see an 80% chance of a third cut in December, according to CME Group data.

Following the inflation report, the yield on the two-year Treasury fell to 4.27% from 4.34% on Tuesday. The 10-year Treasury yield, influenced by long-term growth expectations, initially dropped but eventually rose slightly to 4.45%.

Uncertainty for 2025 and Potential Economic Changes

Looking forward, questions remain regarding the Fed’s plans for 2025. Previous Fed forecasts indicated potential further rate cuts into next year, but Donald Trump’s recent election victory may change that trajectory. Trump’s support for lower taxes, higher tariffs, and reduced regulation could lead to increased government debt, higher inflation, and accelerated economic growth, potentially altering rate cut plans.

“While lower rates can boost the economy and stock prices, they can also fuel inflation,” noted Scott Wren, senior global market strategist at Wells Fargo Investment Institute. “The market may be at an inflection point, with inflation potentially turning upward.”

Stock Highlights

On Wall Street, Rivian Automotive surged 13.7% after it shared more details about its joint venture with Volkswagen Group, which could reach a total size of $5.8 billion, exceeding prior estimates.

In contrast, Spirit Airlines stock fell 59.3% after the company filed for debt renegotiation, which, if successful, could affect shareholder equity but protect employees and customers.

By the end of trading, the S&P 500 rose 1.39 points to close at 5,985.38. The Dow gained 47.21 points, reaching 43,958.19, while the Nasdaq declined by 50.66 points to finish at 19,230.74.

Global Markets and Cryptocurrency Movements

Internationally, Japan’s Nikkei 225 dropped 1.7% following a surge in wholesale inflation to its highest level since July 2022. South Korea’s Kospi fell 2.6%, affected by a significant decline in Samsung Electronics shares.

In the cryptocurrency space, Bitcoin crossed above $93,000 before pulling back below $90,000. President Trump has embraced cryptocurrencies, pledging to make the U.S. the global crypto capital. Meanwhile, Dogecoin (favored by Tesla’s Elon Musk) also pared earlier gains after Trump appointed Musk to head the “Department of Government Efficiency,” or “DOGE” for short.

Source

The post Stocks Drift to Mixed Close as Inflation Report Signals Potential Rate Cut appeared first on Journos News - Breaking News, World News, Top Stories, Todays Headlines and Flash Reports.

Asian stock markets showed signs of recovery on Thursday, bouncing back from early losses as U.S. stocks hit record highs following Donald Trump’s victory in the 2024 presidential election. Investors are now turning their attention to the Federal Reserve’s interest rate decision, set to be announced later in the day.

Japan’s Nikkei 225 index fell 0.4%, settling at 39,339.74, amid concerns over potential trade tensions under a Trump administration. Neil Newman, head of strategy for Astris Advisory Japan, pointed out that Trump’s tariff policies could lead to uncertainties.

Meanwhile, in Seoul, South Korea’s Kospi index rebounded by 0.5%, closing at 2,576.30. Australia’s S&P/ASX 200 also gained 0.1%, reaching 8,204.80.

Chinese markets saw notable gains. Hong Kong’s Hang Seng rose by 0.9% to 20,729.01, and the Shanghai Composite increased by 0.9%, reaching 3,413.47. A key factor behind the Chinese market’s strength was a report showing a 13% year-over-year increase in exports for October, marking the fastest growth in over two years.

Trump has pledged to implement tariffs of up to 60% on Chinese imports, a move that could further strain the Chinese economy, which is already grappling with slowing growth. This uncertainty about higher tariffs and Trump’s tax and regulation policies is influencing market sentiment.

Zichun Huang of Capital Economics suggested that while the impact of tariffs may not be immediate, there is still a risk of escalating trade tensions. However, he added that Chinese shipments might remain strong in the short term, despite any potential drag from Trump’s policies.

In the U.S., stocks surged on Wednesday. The S&P 500 soared 2.5% to 5,929.04, marking its best day in nearly two years. The Dow Jones Industrial Average jumped 3.6% to 43,729.93, and the Nasdaq Composite gained 3%, reaching 18,983.47. All three indices hit fresh record highs.

The long-term effects of Trump’s second term on the U.S. economy will depend largely on whether Republicans gain control of Congress, a development that is still uncertain. Investors are betting that Trump’s policies could stimulate economic growth, which could result in higher bond yields. The yield on the 10-year U.S. Treasury bond rose to 4.43%, up from 4.29% the previous day.

Trump’s pro-business policies, including tax cuts and deregulation, could lead to faster economic growth, but they might also contribute to higher inflation and costs for U.S. households. Trade tensions and restrictions on immigration could add to inflationary pressures, as businesses may raise wages to address labor shortages.

Wall Street’s recent rally has been fueled by expectations of interest rate cuts from the Federal Reserve, as inflation has moderated. However, with the economy showing signs of strength, traders are now revising their expectations for how many rate cuts the Fed will make next year.

The Federal Reserve is widely expected to announce an interest rate cut on Thursday, although traders have begun adjusting their expectations for the number of cuts throughout 2024.

In other markets, the U.S. dollar weakened slightly against the Japanese yen, falling to 154.46 from 154.62. The euro rose to $1.0740 from $1.0730.

Crude oil prices were up, with U.S. benchmark crude increasing by 45 cents to $72.14 per barrel. Brent crude, the international standard, was up 55 cents, reaching $75.47.

Bitcoin saw a slight decline, dropping to $75,780 after hitting an all-time high above $76,480 on Wednesday. Trump has expressed plans to make the U.S. the “crypto capital of the planet,” promising to create a “strategic reserve” of bitcoin.

As markets adjust to Trump’s victory and look ahead to the Fed’s decision, the path forward remains uncertain, with many factors—domestic and international—set to influence global economies in the months to come.

• Asian shares regained momentum on Thursday after early losses, as investors focused on how Donald Trump’s victory might influence the economy and global markets. Attention is also turning to the Federal Reserve’s upcoming decision on interest rates.
• Stocks in Asia bounced back following a strong performance in U.S. markets, driven by optimism around Trump’s return to office. As global investors assess Trump’s economic policies, all eyes are also on the Federal Reserve’s interest rate announcement.
• After early market dips, Asian shares recovered as Trump’s win spurred hopes of stronger economic growth. Investors are now looking ahead to the Fed’s rate decision, with expectations that it could influence market trends.
• Stocks in Asia saw a boost after Trump’s victory, with optimism around his economic policies and potential tariffs. As investors digest these factors, the Federal Reserve’s decision on interest rates remains a key focus for markets.
• In the wake of Trump’s win, Asian markets rallied as investors placed their bets on how his presidency might impact the global economy. Now, market attention shifts to the Federal Reserve’s interest rate decision later in the day.

Source

Full Video

The post Global Stocks Recover Following Trump’s Win, Awaiting Federal Reserve’s Key Interest Rate Decision appeared first on Journos News - Breaking News, World News, Top Stories, Todays Headlines and Flash Reports.