The recent announcements by the US Federal Reserve and the European Central Bank (ECB) have set the markets in motion. The hope that the US Federal Reserve will repair the economic damages of the trade war under the Trump administration through interest rate cuts is already leading to rising stock markets in the USA.
The Role of the Fed in the Trade War
The Fed signals its readiness to lower interest rates in June to mitigate the negative consequences of trade tensions. This prospect has strengthened investor confidence and could lead to an improvement in market sentiment. This development is both significant and advantageous for German investors, as they are closely tied to global capital markets.
The ECB Follows Suit
In parallel, the ECB lowered its key interest rate by another 25 basis points to 2.25% on April 17, 2025. This step, which marks the seventh interest rate cut since mid-2024, was motivated by ongoing disinflation and growing economic risks due to trade tensions. The next interest rate decision of the ECB is scheduled for June 5, 2025.
Interest rate cuts by the Fed could promote more favorable financing conditions and a higher risk appetite in markets worldwide. Furthermore, such a step could positively influence economic growth and thus support European exports.
In conclusion, it remains to be seen how inflation and economic growth will develop. In particular, the effects of trade tariffs or special expenditures in the German economy must be monitored, as these could require further monetary policy measures.
In summary, the prospect of a rate cut by the Fed in June to cushion the damage from the trade war is currently boosting confidence in the US stock markets. This is also significant for international investors, including German investors.