The US Federal Reserve Bank is expected to cut its interest rate on Wednesday, despite its policymakers at loggerheads over prospects for the economy as signs grow that lower classes are feeling the pinch with a weak jobs market stirring concern.
President Trump is set to unleash a defense of his economic agenda of the back of a potential cut that would leave benchmark rates at 3.5-3.75% (lowest for three years), despite inflation running above its 2% target since 2021. Many economists also feel that the impact of Trumps trade tariffs have not yet been felt, highlighting the dependence on AI related capex driving wealth, making the worlds largest economy solely dependent on the top 20 tech firms in the country. Trump will look to help the lower incomes by exempting tips from taxation in his release of the “big beautiful bill” later this week. Trump has also flagged his concerns over the Netflix takeover of Warner Bros saying that Netflix already has a “very big market share” as the justice department ponders whether the deal violate competition laws.
In the UK, PM Starmer is set to house Ukraine leader Zelensky this week, with both German and French leaders also in attendance at number 10 as Europe rallies support for Kyiv in a ‘pivotal moment’. The US continues to mount pressure on Ukraine to take a deal with Russia to bring an end to hostilities. Russia continues to gain territory at its fastest rate since their invasion, the French Elysee fought rumours over the weekend that Ukraine was “on the brink of collapse”.
Angela Rayner is set to rejoin PM Starmer’s cabinet saying he expects the “hugely talented” former Deputy PM to return after her recent resignation over stamp duty on a Hove apartment in September. Elsewhere, Rachel Reeves mansion tax looks to his London’s housing market which will flatline for the next three years according to Hamptons estate agents, with others predicting a 5% drop in value next year.
In Germany, ECB member Isabel Schnabel set out her stool to replace Christine Lagarde by saying she would be comfortable with a rate hike from the central bank however she does not expect the hike to come soon despite investor bets gathering momentum. German benchmark borrowing costs rose to the highest since March after her comments with Yields on German 10-year bonds climbed three basis points to 2.83%
Tomorrow sees the RBA in Australia release their interest rate decision with a hold expected, Wednesday is FED day with interest rate cut expected in the evening, we also have a Bailey speech and Bank of Canada release. We finish the week with UK GDP where a slight increase of growth of the economy is expected (0.1%).