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EU's Inflation is higher than ours, yet they lowered rates again a 7th time
Posted on 4/21/25 at 8:15 pm
Posted on 4/21/25 at 8:15 pm
European Central Bank cut interest rates Thursday for the seventh time and is now at 2.25%. The European Union's inflation rate also decreased to 2.5%.
The inflation rate in the U.S. for March 2025 is 2.4%.
So explain why Powell is refusing to cut rates?
The inflation rate in the U.S. for March 2025 is 2.4%.
So explain why Powell is refusing to cut rates?
This post was edited on 4/21/25 at 8:16 pm
6
Posted on 4/21/25 at 8:31 pm to BCreed1
Euro area headline inflation is lower than ours. It was 2.2% in March. Also, their unemployment is 6.2%
Our headline is 2.4% and unemployment is 4.2%.
Our headline is 2.4% and unemployment is 4.2%.
This post was edited on 4/21/25 at 9:03 pm
Posted on 4/21/25 at 9:12 pm to slackster
Since Trump is complaining about cutting rates we are going to get a lot of these threads spilling over from the Poli board now.
Posted on 4/21/25 at 9:15 pm to UltimaParadox
The ECB doesn’t necessarily have a dual mandate like the Fed, but it’s part of their policy to maintain high employment and economic growth as long as it can co-exist with price stability.
Posted on 4/21/25 at 9:16 pm to BCreed1
The EU economy also isn’t growing. It grew at <1% in 2024. Thus, the reason for cutting rates
This post was edited on 4/21/25 at 9:18 pm
Posted on 4/21/25 at 9:21 pm to slackster
Posted on 4/21/25 at 9:23 pm to UltimaParadox
quote:
Since Trump is complaining about cutting rates we are going to get a lot of these threads spilling over from the Poli board now.
Has not one damn thing to do with Trump. That's you not wanting to face the topic.
Powell was late to raise them. That was under Biden. He's late now.
Posted on 4/21/25 at 9:25 pm to BCreed1
What’s your point? The EU has multiple central banks within the union. The ECB doesn’t control monetary policy for the EU, just the Euro area.
ETA - ECB governs the 20 countries who adopted the Euro. I believe there are 7 EU members that are not governed by the EU as they have their own currencies and central banks.
ETA - ECB governs the 20 countries who adopted the Euro. I believe there are 7 EU members that are not governed by the EU as they have their own currencies and central banks.
This post was edited on 4/21/25 at 9:28 pm
Posted on 4/21/25 at 9:27 pm to IMSA_Fan
quote:
The EU economy also isn’t growing. It grew at <1% in 2024. Thus, the reason for cutting rates
And is expected to be betwen 1.1% and 1.5% in 2025. The forecasts for the USA ranges from 1.2% to 2.2%. In line with the EU or slightly higher.
Posted on 4/21/25 at 9:30 pm to slackster
quote:
What’s your point?
The question you mean? Why is the EU having success in lowering their (7 times now) and their inflation is the same as ours, our outlooks are the same.
If interest rates stay elevated for an extended period, both consumer and business spending are likely to slow, which can dampen overall economic activity. Higher interest rates increase the cost of borrowing, reduce disposable income and therefore limit the growth in consumer spending. Government debt interest payments increase.
What happens to investments when the rate remains high with the message of "We don't know so we wait."? Where does the money flow to?
Posted on 4/21/25 at 9:33 pm to BCreed1
Your premise is false though.
They don’t have higher inflation. They have lower inflation and a significantly higher unemployment and growth problem, ergo rate cuts.
They don’t have higher inflation. They have lower inflation and a significantly higher unemployment and growth problem, ergo rate cuts.
Posted on 4/21/25 at 9:40 pm to BCreed1
Also of note - inflation expectations as of late February:
Market is/was anticipating much lower Euro inflation than USD coming into the tariffs. Inflation expectations themselves can be a self fulfilling prophecy.
Market is/was anticipating much lower Euro inflation than USD coming into the tariffs. Inflation expectations themselves can be a self fulfilling prophecy.
Posted on 4/21/25 at 9:47 pm to slackster
quote:
Your premise is false though.
Is it?
quote:
They don’t have higher inflation. They have lower inflation
Not according to everything I have found. You are talking about the euro area or eurozone. That's not all of the EU. I'm speaking about the EU.
That's like taking a few states and their inflation and saying it's the US inflation.
quote:
a significantly higher unemployment and growth problem, ergo rate cuts.
Their growth is projected to be inline with ours for 2025.
BTW... I like the conversation.
This post was edited on 4/21/25 at 9:50 pm
Posted on 4/21/25 at 10:31 pm to BCreed1
Truflation says it’s time to cut. Anecdotally, it seems fairly evident that if we’re not there, we’re in the ballpark.
I’m not sure changing the overnight rate really moves the needle much in our circumstances though so no strong opinion.
I’m not sure changing the overnight rate really moves the needle much in our circumstances though so no strong opinion.
This post was edited on 4/21/25 at 10:35 pm
Posted on 4/22/25 at 5:28 am to BCreed1
quote:
Has not one damn thing to do with Trump
Posted on 4/22/25 at 6:43 am to slackster
quote:It is 2.4% ... and falling (2.8% in Feb). Meanwhile, our respondent FFR is 4.4% and holding. That pushes Fed monetary policy toward a Highly Restrictive position. Given our current situation, highly restrictive monetary policy is simply inexplicable.
Our headline is 2.4%
This post was edited on 4/22/25 at 6:45 am
Posted on 4/22/25 at 6:51 am to NC_Tigah
quote:
Given our current situation, highly restrictive monetary policy is simply inexplicable.
What is our current situation?
I’d argue it’s sticky inflation and a pretty significant short term bump likely coming, along with full employment. That doesn’t suggest a cut. There’s varying levels of restrictive policy too.
Posted on 4/22/25 at 6:56 am to BCreed1
quote:
Not according to everything I have found. You are talking about the euro area or eurozone. That's not all of the EU. I'm speaking about the EU. That's like taking a few states and their inflation and saying it's the US inflation.
My friend, it’s not the same at all.
The ECB controls monetary policy for the Euro currency. 20 EU members have adopted the Euro, and those 20 are considered the Euro area. Their inflation is 2.2%.
The EU has 27 members - 20 under the ECB and 7 with their own currencies and central banks. Counting inflation in the EU and then using it to justify or explain the ECB is simply incorrect. It would be like using North America inflation to explain the Fed’s decisions.
quote:
BTW... I like the conversation.
This is the longest I’ve discussed something on here without someone calling the other a name in a while.
This same thread on the PT hasn’t gone as well.
Posted on 4/22/25 at 7:50 am to BCreed1
Are we still going to ignore the fact that the same guy as head of the fed under the same president massively cut rates end of 2019/early 2020 (pre-covid) and make it all about Trump?
Not to mention cut the rate to zero pretty promptly after covid became a thing here as well, again under the same president.
Not to mention cut the rate to zero pretty promptly after covid became a thing here as well, again under the same president.
This post was edited on 4/22/25 at 7:51 am
Posted on 4/22/25 at 9:19 am to NC_Tigah
quote:
It is 2.4% ... and falling (2.8% in Feb). Meanwhile, our respondent FFR is 4.4% and holding. That pushes Fed monetary policy toward a Highly Restrictive position. Given our current situation, highly restrictive monetary policy is simply inexplicable.
Yep. He's going to dropped the ball again!
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