Inflation or growth
Jul 11, 2024
The cumulative impact of the aggressive interest rate hikes implemented by the ECB and the Federal Reserve is being felt across the European and US economies, affecting various sectors and continuing to weigh on growth. The lagged effects of these policy actions are dampening economic growth, as higher borrowing costs weigh on consumer spending, business investment, and overall confidence. The U.S. projects GDP growth at 2.1% for 2024, with sectors like real estate feeling the pinch of higher borrowing costs. In Europe, the ECB’s recent rate cut aims to support growth, yet economic expansion remains modest with projections of 1.4% for 2025. The careful calibration of monetary policy is crucial as central banks seek to mitigate the adverse impacts of past rate hikes while fostering sustainable economic activity. After all, nobody wants the economy to hit the snooze button indefinitely!
