Breaking news: The European Central Bank has cut its benchmark interest rate by a quarter-point to 2.5%, amid signs that inflation is returning to its 2% goal in a lacklustre Eurozone recovery. The rate is now at its lowest since February 2023 https://on.ft.com/3XpdR6n
European economy is strengthening, and investments will speed it up ever further. To maintain the momentum, the EU should kindly ask the UK to return to and also open Canada a door to join the Union, which should be renamed Transatlantic Union. Both of them should have "seats in the inner circle" and not be excluded like Germany and France previously did for the second biggest member UK. The Union should also maintain its momentum beyond the coming free trade deal with Mercosur, by having similar deal e.g. with Mexico. PS. If the US really deports the 240,000 Ukrainian refugees, we in Europe warmly welcome them. Slava Ukraini!
I hope MCB & Bank of England can take a page out of ECB’s book at the next rate review session on Thursday 20/03/2025. The cost of borrowing is hurting SME’s in U.K. too. It makes sense to cut interest rates at this point rather than being overtaken fully by adverse economic events. Inflation may run out of control, however if the rates are not cut, UK economy will continue to be trapped in a downward trajectory. Financial markets have pencilled in at least 2 interest rate cuts in 2025, taking rates to around 4% by the end of 2025
Nice throwback to 2001! 😄
This move by the ECB is a strategic step to stimulate economic growth and support the Eurozone's recovery. It's crucial for businesses and investors to closely monitor how this rate cut influences consumer spending and investment activities. Additionally, this decision underscores the importance of maintaining a balanced approach to monetary policy to achieve long-term economic stability. Looking forward to seeing how this impacts the broader financial markets and lending environments.
The bank without any gold reserves. Lol
Criticism: Lowering interest rates may provide short-term economic stimulus, but has the ECB considerd the long-term consequeces? Rising debt levels, potential inflation, and reduced retuns for savers could lead to unintended crises. Is there a more sustainable alternative than just adjusting interest rates? Impactful and Less-Heard Solution: Instead of relying solely on interest rate cuts, targeted lending to productive sectors could be a more sustainable approach. For example, offering low-interest loans to innovative businesses and green industries would foster long-term growth rather than just boosting short-term consumpion. Additionally, investing in digital infratructure and AI-driven productivity could enhance efficiency and create lasting econmic benefits beyond the temporary relief of lower borrowing costs. 🌻💫
The ECB’s shift in tone is a critical signal for businesses engaged in international trade and cross-border investments. With borrowing costs likely to remain higher than expected, companies must carefully review financing agreements and trade contracts to ensure they remain commercially viable. Foreign exchange volatility also raises legal risks in cross-border deals, requiring businesses to reassess currency clauses and hedging strategies. A slower pace of rate cuts could impact commercial disputes, contract performance, and investment structuring in the Eurozone. Now more than ever, legal due diligence and proactive contract management are key to mitigating financial and regulatory risks in a shifting economic landscape. #ECB #InternationalLaw #CorporateLaw #TradeLaw #ContractLaw #LegalRisk #MergersAndAcquisitions #BusinessLaw #RegulatoryCompliance
* Central Banks, AI, and Inflation: * Central banks should advocate the creation of an AI-generated algorithm which will enable them to predict and control inflation with more efficacy than the tired traditional macroeconomic models currently employed. Such an algorithm would utilize all the economic and financial data and benchmarks already available to central banks and government treasuries. This algorithm should be able to mine such data and produce a fresh state-of-the-art econometric tool which would predict and control inflation with greater mathematical precision and with less (**consumer pain**) than the imprecise macro-model currently employed. * Food for thought
The Eurozone needs to do a lot other than just cutting rates to have an overall recovery!!