Why is the ECB lowering rates but the FED isn't?

[Odohu]

Seems Powell is having an alpha male competition with Trump. He doesn’t think rates need lowering, Trump does. We will see who blinks first but I read Trump is exploring possibilities to relieve Powell from his duties. Historically the FED always seems to act too late. I think Powell should cut rates, it will make life cheaper for Americans.

I find it very strange that Powell would nurture the thought of opposing Trump when Trump can easily replace him. The job of the Fed is supposed to be in line with the government of the day so why will the Fed refuse to lower rates when the government wants the rates lowerred? I know that Trump will not allow Powell thwart his economic policies so Powell's days may be numbered.

[Dogedegen]

Tariffs, which are actually a tax on every American citizen

Stop repeating this bullshit about tariffs. If they are so bad, why don't other countries lower their tariffs on American products to 0%? If democrats increased tariffs you would see most of media spinning it as the best economic policy in the last 20 years, and you would repeat their bullshit as a well behaving NPC.

Seems Powell is having an alpha male competition with Trump. He doesn’t think rates need lowering, Trump does. We will see who blinks first but I read Trump is exploring possibilities to relieve Powell from his duties. Historically the FED always seems to act too late. I think Powell should cut rates, it will make life cheaper for Americans.

I find it very strange that Powell would nurture the thought of opposing Trump when Trump can easily replace him. The job of the Fed is supposed to be in line with the government of the day so why will the Fed refuse to lower rates when the government wants the rates lowerred? I know that Trump will not allow Powell thwart his economic policies so Powell's days may be numbered.

The only thing keeping Powell in his position is the economic incentives. He's not gonna get his job back in 2026, so he is leaving one way or another. However, he can cause republicans harm with his behavior which is exactly what is going on. I love how random people comment on these matters as economic experts, when most of the information that they have ingested about this are partisan lies.  

[Abiky]

If Trump hadn't got into power then we would probably see the ECB and US Fed lowering interest rates at a similar pace. That is the problem with throwing dynamite around the economy, you leave the central bankers with no choice but to keep their defenses up which means higher rates. Tariffs, which are actually a tax on every American citizen, are driving inflation higher in America which was the root cause of interest rates being so high in the first place. Trump likes to blame all others but has shown nothing but incompetence and the makings of a failed dictator that we have seen many times in history. The fact that the US president, who put the head of the central bank into the position in the first place, is now leaning on what is supposed to be an independent decision making body for the benefit of the US economy is just another sign of his terribly weak leadership.

Tariffs did harm the economy within the short term. Especially astronomical rate hikes of over 150% (China tariffs). But I don't think Trump is a weak leader. He's actually doing a better job than Joe Biden. The fact that he quickly settled peace between Iran an Israel (immediate ceasefire), is something to be admired. Not to mention, the spending cuts achieved via his newly-formed D.O.G.E agency. All in an effort to Make America Stronger and Wealthy Again.

The only thing that can ruin it all is politicizing the FED. It could undermine investors' confidence in the US. I believe the FED should stay neutral for the benefit of all. But that's just my opinion. Whoever takes the reigns as Powell's sucessor, would surely meet with Trump's demands. The damage might be already done. Meanwhile, the ECB continues to cut rates like crazy. Is this a sign the EURO will fare better in the future? Could be. Right now, the EUR is stronger against the USD. Hopefully, Trump steers things in the right direction before it's too late.

[EarnOnVictor]

The plain answer is Donald Trump!

By now, the FED would have cut the Federal Funds Rate at least 2-3 times if not for the uncertainty Donald Trump brought into the equation.

We all see how the US market reacted in the wake of his presidency. This is what I term "abomination". Such shouldn't be allowed to happen in a sane country. As it is now, Jerome Power needs to be very careful, and with time, when everything has finally been put to check, the cut will happen, like with the Bloc.

[fillippone]

At the moment the market entirely removed the market pricing of a cut in July.
It’s only the beginning, and this will exacerbate the verbal tug of war between Donald Trump and the JPow.
I said verbal as I am not entirely convinced that a weak dollar is not a welcomed outcome for the US.

[Abiky]

At the moment the market entirely removed the market pricing of a cut in July.
It’s only the beginning, and this will exacerbate the verbal tug of war between Donald Trump and the JPow.
I said verbal as I am not entirely convinced that a weak dollar is not a welcomed outcome for the US.

Actually, it's Trump's wish for the USD to become weaker in the long run. He said so many times. This will make exports a lot cheaper, while making imports more expensive than usual. When you combine this with Trump's tariff hikes, inflation will soar towards unpredecented levels.

Meanwhile, the EU has kept tariff rates consistent at comfortable levels to help maintain good trade relationship with other countries. This allows the ECB to keep cutting rates safely (due to lower inflation). Now the FED is obliged to either raise rates or keep them as is to avoid things from spiraling out of the control. Things will hold out until Jerome Powell is removed from office. We'll see what happens in the long run. Fingers crossed that the world economy will recover soon.

[hafiztalha]

At the moment the market entirely removed the market pricing of a cut in July.
It’s only the beginning, and this will exacerbate the verbal tug of war between Donald Trump and the JPow.
I said verbal as I am not entirely convinced that a weak dollar is not a welcomed outcome for the US.

Actually, it's Trump's wish for the USD to become weaker in the long run. He said so many times. This will make exports a lot cheaper, while making imports more expensive than usual. When you combine this with Trump's tariff hikes, inflation will soar towards unpredecented levels.

Meanwhile, the EU has kept tariff rates consistent at comfortable levels to help maintain good trade relationship with other countries. This allows the ECB to keep cutting rates safely (due to lower inflation). Now the FED is obliged to either raise rates or keep them as is to avoid things from spiraling out of the control. Things will hold out until Jerome Powell is removed from office. We'll see what happens in the long run. Fingers crossed that the world economy will recover soon.

Europe central bank has different strategies to get money from the big parties and they are lowering interest rates and many people are thinking to withdraw this money and then they will invest in best asset for which they are thinking that is best for them .Many politicians if that Europe have money in that bank and I think they will change this policy after few months because we will see bid transactions here because people always try to double and triple money. They will go to Stocks or bond Investing and many people will also go towards cryptocurrency who know what cryptocurrency is . Federal government has their same policies and people are happy who deposit their money and they will keep this money in the bank for the years .

[fillippone]

Actually, it's Trump's wish for the USD to become weaker in the long run. He said so many times. This will make exports a lot cheaper, while making imports more expensive than usual. When you combine this with Trump's tariff hikes, inflation will soar towards unpredecented levels.

The point is that a weak dollar would require higher rates on the long end of the curve, raising the cost of debt financing, something the current administration cannot afford. Cutting interest rate doesn't mean anything for the longer part of the curve: 2/30 (rate differential between 30-year treasuries and 2y-treasuries) is deemed to steepen!