Divergence figures to be the primary theme in global central banking during the final six months of the year as policymakers around the world adjust to higher American tariffs.
In the United States, the Federal Reserve will have to determine whether tariffs will be a one-time price shock or turn into sustained inflation. But in Europe and elsewhere, central bankers will be dealing with the risks of slowing growth and disinflation caused by the tariffs, which will only add to the pressure to cut rates.
We expect the European Central Bank and Bank of England to adopt modest cuts, while the Federal Reserve will remain on hold for now.
Read the full report from RSM’s global team of economists, including Joseph Brusuelas, Tu Nguyen, Tuan Nguyen, Thomas Pugh and Devika Shivadekar, at The Real Economy Blog.
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