The ECB followed Trumps advice, and cut rates by 25 basis points, unlike the Fed. The Fed decided to resist Trumps monetary advice and hold rates steady, citing inflationary pressures and uncertainty. The ECB was more proactive and cut rates a further 25 basis points, despite resurgent inflation. The EU GDP number was flat and the whole Eurozone is suffering recessionary economic conditions, so stimulus was essential. The Fed decided to resist the advice of the new President, setting themselves up for a head on fight with Trump. US GDP came in at an annualised 2.3%, providing some room to dally, for Fed Chair Powell. The rate cut allowed the EUR to slip back to 1.0400, while the GBP traded around 1.2450.
The firmer reserve added pressure to the AUD which is heading back towards 0.6200, while the NZD dipped below 0.5650. NZ Business Confidence fell sharply, and the trade numbers were not good. Economic conditions remain challenging, in both Australia and NZ, and pressure is building for further rate cuts.
