Central banks will continue to be a center of attention during 2025. While governments are responsible for creating inflation, central banks goal is to control it, using interest rates and its balance sheet to keep it stable. On the chart below you can see how they are expected to continue easing rates during 2025, even after being aggressive this year. We should expect inflation to tick up, and consequently, pauses in rates easing along the way. Europe is expected to be more aggressive than the US and the rest of the world, and perhaps that will lift EU equity markets and close the gap with the U.S., as many analysts expect. Japan is the only exception to the norm in the developed world, and is expected to lift interest rates to defend the currency and fight inflation without worsening the debt problem they have.
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