Paul Hannan
Appearances
WSJ What’s News
Trump Spurs European Race to Rearm
Yes, it could. The question is, how soon will we see evidence of that? So today, investors are as near certain as you can be that the ECB is going to cut its key interest rate again, and they would expect a couple more cuts to come in the months ahead. That's because we're moving into the range where interest rates are neutral.
WSJ What’s News
Trump Spurs European Race to Rearm
So they're not stimulating the economy, but they're not holding it back. From there, if you look at the weakness of the Eurozone economy and the potential for tariffs from the U.S., you might think that you need to go below neutral. But then comes along this German announcement. And last night, French President Emmanuel Macron was laying out his plans for boosting defense.
WSJ What’s News
Trump Spurs European Race to Rearm
So Bertrand is right that this does give cover for others to move. And that could be a big stimulus to growth and a big push on inflation. So 18 months to two years ahead, which is where central banks think about things, you could be seeing a stronger Eurozone economy than they'd expected and more inflation than they'd expected. The ECB's decision is due at 8.15am Eastern.