RECAP
The euro extended its losses across the board during yesterday’s session following the ECB‘s decision to cut interest rates by another 0.25%, marking the third reduction this year and the first consecutive cut in 13 years. This move was driven by persistently low inflation and sluggish economic growth.
In her remarks, President Lagarde emphasized that the disinflationary trend is “well on track,” with recent data over the past five weeks consistently pointing toward lower inflation. She further noted that the inflation outlook has been negatively impacted by recent underperformance in economic activity indicators.
Despite the rate cut, many market participants are expressing concerns that the ECB may be “falling behind the curve” and might need to implement even deeper cuts to avoid a recession.
Meanwhile, the resilience of consumers continues to surprise analysts, as the latest retail sales data from both the US and UK significantly outperformed expectations. This morning’s UK report revealed that consumption activity rose by 0.3% in September, contrary to the forecasted 0.3% decline.
