Leaving Fed behind, top central banks have room to ease

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Frankfurt/Zeroic: Central banks around the world have enough space to maintain interest rates, and according to policy makers and analysts, a limited ‘declining’ by the US Federal Reserve may continue –

Separating such methods can cause US President Donald Trump a problem, and by taking a sting from his planned taxes on trade, and even increases the risk of borrowing US companies and households. You have to pay more prices.

The feed is the largest central bank in the world and usually takes others to the policy. But the start of 2025 has been far from normal. The United States is in strong economic health, while many other major economies in the world are struggling, combined with the uncertainty caused by Trump’s policies and the threats of trade, tied the hands of the feed to further rates. Is

Ironically, adjustment in the threatening trade war of the global economy is eliminating some of Trump’s prices, for the benefit of foreign companies sold to US consumers.

Rets promote inflation at home, so the feed keeps interest rates higher. This is reinforcing the dollar at most currencies, which, contrary to the administration’s wishes, is more profitable to export to the United States.

For example, Switzerland is already enjoying the windfall. “A weak franc will also help the Swiss industry by exporting a weak American cheap,” said Carten Junius, chief economist at Jay Safra Sarson. “The effects of any US prices imposed can also be met.”

An important target of Trump’s rhetoric due to Trump’s major trade surplus, 20 countries can also meet some of the euro zones, some currency, which has been reduced by 7.0 % since the initial autumn.

“European companies, to defend their market share, may be willing to sacrifice their margin,” said Peru Sepolon, a member of the European Central Bank Board Board. “A portion of this sacrifice can be exported through the exchange rate. Therefore, in the end, the overall effect cannot be so large.

A weak currency is usually inflation because it makes imports, especially energy, more expensive. But in many places, inflation is moving towards, which does not cause weak growth due to the minimum commercial veins, and policy makers are not yet disturbed by progress.

The ECB, the Bank of England, and the Bank of Canada have also reduced interest rates in recent times, even though the feed said it was not in a hurry to move. The Reserve Bank of India and the Bank of Mexico, though coming from high levels, also reduced the rates overnight.

The effects of currency currency of discrimination rates have been “relatively mod modest,” said Tiff McCallum, head of Canada’s central bank, while Sterling said that the fall of sterling – 7.0 % decrease against the dollar since September – very few It was.

“We rose to $ 1.12 (per euros per euros) on Monday. Is it really changing the world to the ECB or the central bank? I don’t think so,” the head of the global FX Andreas Coenig of Amandi Said

Boundaries

There are signs that Trump, who was pushing for cutting the feed only weeks ago, has regained the theory of where US interest rates need.

Treasury Secretary Scott Basant said this week that when Trump talks about low-rates, he is referring to production on a 10-year Treasury note-the US mortgage market borrowing rates and business bank. The key to lending. A short -term rate has been set by the central bank.

Policy change is also driven by economic basic principles: the US economy is only performing well, so interest rates will be high in extinguishing the pressure of inappropriate inflation. However, the interest rate gap cannot increase indefinitely.

Namura’s World Forex Strategist Dominic Boning said, “When you suffer from central banks … when you see the major currency weakness that is sold in the bond market, which is more weak in currency and inflation. “”

“You know the spiral – that’s why central banks will really need to deal with the television. But I don’t think you’re going to see it,” Bonning added. Policy makers can also return if energy prices increase once again, which is why oil and gas are usually sold in the dollar.

Another problem is that central banks can reduce short -term interest rates, but borrowing costs are more driven by the market and if US production increases, others are likely to follow it. This makes it more expensive than borrowing and weakens the economic growth.

“Generally, if US production goes up or down, European bonds go the same direction,” said EFG Bank senior economist Gian Liyan Mandrozo. Companies and households will face more costs to borrow, despite reducing short -term interest rates by central banks. “RE -Reuters