The European Central Bank will review Eurozone monetary policy today, with an announcement expected later in the day.
Analysts expect Europe’s central bankers to cut interest rates, which currently sit at 0%. The cut will be announced due to the sinking euro and bond yields in the last eight months.
In anticipation of a rate cut, some countries and their leaders, such as US President Donald Trump, Japanese Prime Minister Shinzo Abe, and Brazilian President Jair Bolsonaro, are accusing the ECB of instigating a “currency war”, pointing to an unprecedentedly weak Euro.
In fact, President Trump publicly argued that cutting rates, and thus weakening the Euro, will make exports from the Eurozone far more competitive and will unfairly boost the manufacturing industries in the Eurozone at the expense of some of its trading partners. In addition to the dollar, the Euro has fallen against the Japanese Yen in the last year.
Reports are suggesting that the Bank of Japan, the Swiss National Bank, and the US Federal Reserve will all decide to cut rates in meetings next week in response to actions by the European Central Bank.
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Steven is a member of both the Risk Analysis and Current Developments teams. Serving as both a researcher and publisher, he assists with the delivery of all facets of the Daily Brief. Steven's writing focuses on China, Russia, and macroeconomics.