Speculations about Interest Rate Cuts and Their Impact
The current speculations about possible interest rate cuts dominate the financial markets and significantly contribute to the stabilization of stock exchanges. Particularly in the USA, the Middle Eastern conflict is now considered a settled issue on Wall Street, leading market participants to refocus on monetary policy developments.
Influence of Donald Trump
US President Donald Trump further fuels the interest rate cut fantasies by exerting pressure on the US Federal Reserve and even considering an early announcement of his candidate for the Fed chairmanship. This could lead to public comments on interest rate cuts during Jerome Powell’s tenure influencing market expectations and thereby supporting the stock market.
Interest Rate Cut Forecasts in Europe
In Europe, interest rate cut expectations are also a central theme: The European Central Bank (ECB) is expected to decide on a key interest rate cut of 0.25 percentage points on June 5, 2025. The markets have largely priced in this cut. Another reduction is also expected for July; however, a pause is anticipated after that, as inflation has eased and economic growth appears to have stabilized.
Adjustment of Investment Strategies
These monetary policy outlooks lead investors to adjust their strategies and prepare for a more moderate interest rate environment. The euro has recently gained value in US trading, influenced by geopolitical developments in the Middle East; nevertheless, the focus is increasingly shifting towards monetary policy over geopolitical risks.
In summary, the stock exchanges are currently primarily using speculation about impending interest rate cuts – both in the USA and Europe – to gain stability. The Middle Eastern conflict is being increasingly sidelined in favor of a stronger focus on monetary policy decisions and their impacts on the markets.