Changing EuropeEurozoneExchange rateInterest rate

A Changing Europe Monitor: Central banks’ new mantra

Central banks’ new mantra: desperately trying to overheat.

Buoyant growth ahead in the EU and US, underpinned by improving labour markets. That said, market expectations about the coming Fed interest rate hikes are vastly exaggerated in our view. Traditionally, falling unemployment has been correlated with falling poverty rates – but not much of that is visible this time around. We expect the Fed to deliver only one 25bp rate hike every 12 months.