BCE and Fed meeting: two different savings, a common perspective

Despite very different economic contexts on both sides of the Atlantic. However, the ECB and the Fed seem, for the moment, to advance at the same rate. For example,

The two central banks should maintain their unchanged rates in July. Consequently, and market expectations indicate an almost identical probability of decline in September. Meanwhile, The message is clear: the monetary authorities are waiting to have more visibility. In addition, This prudence is explained by a double uncertainty: that linked to global commercial dynamics. Consequently, that relating to budget support measures. Nevertheless, Two determining factors for inflation, growth and exchange trajectories.

ECB: no emergency. Consequently. Similarly. Moreover, but vigilance

Over the past twelve months, the ECB has lowered its 200 -basic points, bringing them back into a range that many consider neutral, between bce fed meeting: two different new 1.75% bce fed meeting: two different new and 2.25%. Furthermore. However. Furthermore, The monetary framework seems to be bce fed meeting: two different in balance today in the euro zone: neither too accommodating nor too restrictive.

However, this stability could be short -lived. However, Two major uncertainties keep the ECB on alert.

First. Nevertheless, Additionally, However. Meanwhile. the potential taxation of customs duties between the United States and the European Union, whose details must be revealed on August 1, invites caution. In addition, Second. Furthermore, if the budget recovery measures expected in Germany (with formal approval in September) arouse a certain optimism. the desire to make could come up against the capacity for implementation. These two uncertainties question the duration during which inflation will remain below the target of 2%.

In view of the recent data that is inconsistent on growth. inflation, and in the absence of immediate negative catalysts, bce fed meeting: two different new a preventive drop in rates in July seems unlikely. bce fed meeting: two different new The status quo seems to be essential.

For September, the markets estimate the probability of a decline at bce fed meeting: two different 50%. However. the weakness of growth. the limited effect of one euro stronger on inflation. less growth in wages and the risk of inflation which remains in DECA of the objective due to the increase in cheap Chinese imports from the United States to Europe could influence the position of the ECB. With inflation close to the objective. advanced indicators reporting normalization of the economy. we believe that the probability of lower rates in September is greater than the expectations of consensus.

The ECB could thus bring its key rate back to the level of 1.5%, especially if the tariff risk materializes or if inflation remains permanently under the target.

Fed: bce fed meeting: two different new Between economic robustness. political pressure

The Fed also evolves in an ambiguous environment, but bce fed meeting: two different new for very different reasons.

From a macroeconomic point of view, the American economy remains vigorous. Employment is solid. especially because of the constraints bce fed meeting: two different on the offer of labor due to new migratory policies. Consumption remains dynamic. And fiscal policy remains expansionist coming to further stimulate an economy that has believed above its potential for more. than four years.

Politically, on the other hand, the situation is more tense. The American president openly criticizing Jerome Powell, making doubt about a possible threat as to the independence of the Fed.

Between the hammer. the anvil

The Fed does not anticipate a return of inflation to 2% before 2027. more than six years that the latter did not return to its target. The latest prices are bce fed meeting: two different new reassuring. There are already signs of transmission of import costs at consumer prices, especially via for manufactured goods. The FIFO bce fed meeting: two different new (FIRS-IN-FIRST-OUR) model. predominant in American distribution, suggests that the increase in customs duties is just beginning to manifest itself.

Jerome Powell is subject to growing political tensions, but bce fed meeting: two different any immediate replacement hypothesis seems unlikely. President Trump has little interest in developing the management of the Fed six months from the end of his mandate. Such an initiative would compromise the credibility of the central bank. harming the stability of the dollar, inflation expectations and long rates. However. it is precisely the credibility of the Fed that has made it possible to maintain an anchoring of long. -term inflation anticipations since the prices of 2022. Any drift towards a form of budgetary dominance or premature monetary softening would jeopardize this bce fed meeting: two different new harshly acquired stability.

Thus our central scenario is that the Fed maintains its guiding rates unchanged for the September meeting of September. provided that the labor bce fed meeting: two different new market is relatively well by then.

Impact on wallets

Although short -term expectations for the two central banks seem to be aligned. market expectations reflect very different perspectives:

• ECB: The markets bce fed meeting: two different grant a probability of. 30% to see guiding rates at 2%. more at the end of the year.
• Fed: Markets grant 30% like the FED drops its rates to 3.5%.

In this context. we retain a positioning in favor of short rates in Euro. the risk is rather to see the ECB lower its monetary policy rates. On short -term American rates. we adopt a more cautious approach. the markets seem too optimistic to us on the prospect of bce fed meeting: two different new flexibility during the summer.

We remain negative on the long parts of rate curves. anticipating a penitification of the latter in a context of increased budgetary expansion. especially if budgetary broadness was bce fed meeting: two different new combined with rate reductions.

We promote the obligations indexed to inflation in order to guard against the risk of resurgence of inflationary pressures. even if, for the time being, inflation anticipations remain relatively contained.

Finally. we adopt bce fed meeting: two different a selling position on the dollar. weakened by the erosion of the credibility of American institutions. the incessant criticisms against the Fed, the rise in political uncertainty linked to the trade war and the increased risk of local inflation supplied by a expensive budgetary policy.

The ECB, it operates in a very different context. Paradoxically. European pluralism, with its 27 members with divergent interests, makes interference more complicated and ultimately bce fed meeting: two different new strengthens the credibility of the institution. A context that encourages us to favor the obligations and currencies denominated in euros.