According to Odaily, market forecasts suggest a significant divergence in monetary policies between the Federal Reserve and the European Central Bank (ECB) next year. This expectation arises from differing economic growth and inflation projections in the United States and Europe. Market pricing indicates that by the end of next year, the Federal Reserve's rate cuts will be only half of those anticipated from the ECB. The ECB is grappling with sluggish economic growth and inflation rates below its targets.
Jennifer McKeown, Chief Global Economist at Capital Economics, commented on the situation, stating, "We anticipate that the Federal Reserve will adopt a cautious approach due to rising inflation risks, while the ECB is likely to respond strongly to economic weakness. This will lead to a divergence in their easing cycles." The contrasting economic conditions and policy responses are expected to accentuate the differences between the two major economies, with the U.S. experiencing higher growth and inflation compared to Europe.