Group 1 - The Federal Reserve is preparing to restart its rate-cutting cycle, diverging from other major central banks that are nearing the end of their easing phases [1][2] - Market expectations indicate a 25 basis point rate cut next week, with a cumulative reduction of nearly 70 basis points by the end of the year, and some institutions suggest a possibility of a 50 basis point cut [1] - The European Central Bank has maintained its rate at 2% and lowered its inflation forecast for 2027 to 1.9%, with a 50% probability of a rate cut around mid-2026 [1] Group 2 - The Bank of Japan is the only major central bank tightening its monetary policy, with potential for a rate hike by the end of the year despite domestic political uncertainties [1] - The Bank of Canada is expected to restart rate cuts next week, with two additional cuts anticipated by January next year due to economic weakness and rising unemployment [1] - The Reserve Bank of New Zealand has already cut rates by 25 basis points last month and is expected to cut again in October and by the end of the year [1]

Core Viewpoint - The European Central Bank (ECB) is expected to maintain interest rates unchanged, with various banks providing insights on potential future actions and economic conditions affecting this decision [1][2][3][4][5][6][7][8][9][10][11]. Group 1: Interest Rate Expectations - Several banks, including Scotiabank and HSBC, anticipate that the ECB will keep interest rates steady, with a cautious approach towards any future rate cuts [1][2]. - Bank of America suggests that ECB President Lagarde will mention the US-EU trade agreement while emphasizing flexibility without committing to future actions [3]. - Societe Generale predicts that the next rate cut may occur in the first quarter of next year, influenced by weakening inflation and increasing negative impacts from tariffs [4]. - UBS believes that the rate cut cycle may have ended due to large-scale fiscal stimulus measures being introduced in the EU, which are expected to support the economy starting next year [6]. - Danske Bank concludes that the easing cycle is likely over, with rates expected to remain unchanged until the end of next year due to unexpected growth and fiscal measures [7]. Group 2: Economic Conditions and ECB's Position - Monex Group indicates that if Lagarde officially announces victory over inflation and signals the end of the current easing cycle, the euro may appreciate [8]. - French Foreign Trade Bank notes that a final rate cut of 25 basis points in December is possible, contingent on a more severe slowdown in the labor market than anticipated [9]. - Berenberg Bank highlights that the market is focused on how the ECB will respond to political turmoil in France, although Lagarde is likely to remain silent on this matter [10]. - ING suggests that the current rationale for the ECB's inaction is strong, but the market may be underestimating the possibility of another rate cut this year [11].

Core Viewpoint - The lower-than-expected U.S. PPI data has no impact on the Federal Open Market Committee's (FOMC) decision, with a 25 basis point rate cut next Wednesday being almost certain [1] Group 1 - Michael Brown, a senior research strategist at Pepperstone, indicates that the market pricing shows a slight probability of a 50 basis point cut if CPI data is also weak [1] - There are upward price risks due to tariffs, and the current level of policy tightening remains uncertain [1] - The Federal Reserve is expected to restart the easing cycle at a more moderate pace during the September meeting [1]

Core Viewpoint - The August non-farm payroll report from the U.S. indicates a weakening labor market, with employment, hours worked, and income growth returning to pandemic levels [1] Group 1: Federal Reserve Actions - The Federal Reserve is almost certain to cut interest rates at the September meeting, with a 25 basis point cut highly likely [1] - If August inflation is weaker than expected, there is a greater chance of a 50 basis point cut [1] - The Fed's previous inflation forecasts have been proven overly pessimistic, while their labor market outlook has been overly optimistic [1] Group 2: Economic Projections - The Fed is expected to initiate a prolonged easing cycle, aiming to reduce rates to what it considers a "neutral level" of around 3% by March 2026 [1] - The new Fed chair is likely to further enhance stimulus measures, potentially lowering rates close to 2% [1] - There is a risk that if inflation rises again, some of the stimulus measures may be reversed by 2027 [1]

Core Viewpoint - The August non-farm payroll report from the U.S. indicates a weakening labor market, with employment, hours worked, and income growth returning to pandemic levels, suggesting a likely interest rate cut by the Federal Reserve in September [1] Summary by Relevant Sections - **Labor Market Conditions** - The labor market is showing signs of weakness, with key metrics such as employment, hours worked, and income growth reverting to levels seen during the pandemic [1] - **Federal Reserve's Monetary Policy** - The Federal Reserve is almost certain to cut interest rates by 25 basis points in September, with a potential for a 50 basis point cut if inflation data for August is weaker than expected [1] - Previous inflation forecasts by the Federal Reserve have proven overly pessimistic, while their predictions regarding the labor market have been overly optimistic [1] - **Future Interest Rate Projections** - A sustained easing cycle is anticipated, aiming to lower rates to around 3% by March 2026, which is considered the "neutral level" [1] - The new Federal Reserve Chair is expected to implement further stimulus measures, potentially reducing rates close to 2% [1] - There is a risk that if inflation rises again, some of the stimulus measures may be reversed by 2027 [1]

Group 1 - Powell's speech at the Jackson Hole global central bank meeting signals a potential shift in monetary policy, indicating that the Fed is open to interest rate cuts due to rising risks in the labor market and economic growth slowdown [1] - The current economic environment, characterized by high tariffs and tightened immigration policies, still shows resilience, but significant slowdowns in the labor market and economic growth are evident [1] - The expectation of a rate cut in September could enhance market enthusiasm for gold, as lower interest rates increase the investment appeal of non-yielding assets like gold [1] Group 2 - Gold prices surged to a high of 3378, driven by rising expectations of rate cuts, increasing economic risks, and a weakening dollar [2] - The market's shift from prioritizing anti-inflation measures to balancing employment and inflation reflects in gold pricing, indicating a potential onset of a loosening cycle [2] - Key upcoming economic indicators, such as the August non-farm payroll data and CPI, along with the Fed's September meeting, will be crucial in determining the sustainability of rate cut expectations and their impact on gold's medium to long-term trends [2]

Core Viewpoint - The Reserve Bank of New Zealand is expected to lower interest rates this week, initiating a new easing cycle after signs of economic stagnation in July [1] Group 1: Interest Rate Changes - 22 out of 23 economists surveyed predict a 25 basis point reduction in the official cash rate to 3% [1] - If the rate is lowered, it will mark the lowest benchmark rate in three years [1] Group 2: Economic Context - The Reserve Bank maintained the interest rate last month to assess rising inflation but is now shifting focus to weak economic growth [1] - ASB Bank analyst Wesley Tanuvasa anticipates that the official cash rate may remain at supportive levels for some time to stimulate the New Zealand economy [1] Group 3: Future Projections - Each interest rate decision before the end of the year could have significant implications, with an increasing likelihood of rates dropping below 3% by year-end [1]

Group 1 - The European Central Bank (ECB) is expected to maintain its interest rate policy until December, with a potential rate cut marking the end of the current easing cycle [1] - Economists have delayed their expectations for another rate cut by three months compared to the July survey, anticipating that the deposit rate will remain at 1.75% for nine to ten months until demand recovers [1] - The ECB's decision-making timeline has been pushed to the end of 2025, allowing for a more thorough assessment of the economic impact from trade tensions initiated by former U.S. President Trump [4] Group 2 - Global central banks are exhibiting a cautious policy stance, with the Federal Reserve remaining inactive this year and the Bank of England acknowledging "substantial uncertainty" [4] - Following the ECB's decision to keep rates unchanged last month, several officials indicated that there is currently no necessity for further rate cuts, leading to a market adjustment of the September rate cut expectations [4] - If the ECB misses the opportunity for a rate cut in December, financial markets may conclude that the easing cycle has officially ended, with a prior survey indicating that half of respondents believed the ECB might skip three consecutive meetings [4]

Economic Growth in Eurozone - Eurozone's GDP grew by 0.1% quarter-on-quarter in Q2, surpassing market expectations of stagnation, indicating that businesses are adapting to trade uncertainties [1] - Year-on-year GDP growth for Q2 was 1.4%, exceeding the market forecast of 1.2% [2] - Oxford Economics maintains a growth forecast of 1.1% for the Eurozone in 2023 and 0.8% in 2026 despite increased tariffs on European exports to the US [2] Country-Specific Performance - Spain's economy showed strong growth of 0.7% quarter-on-quarter, while France recorded a 0.3% increase, offsetting declines in Germany and Italy, which contracted by 0.1% [2] - France's Q2 GDP growth was the fastest since Q3 2024, driven by inventory changes and a slight increase in household consumption [2] - Germany's GDP contraction was in line with expectations, with increased consumption and government spending but a decline in investment [3] Future Economic Outlook - Spain is expected to continue outperforming other Eurozone countries, with a projected annual growth rate of 2.5% despite a slight slowdown in the second half of the year [3] - The resilience of the Eurozone economy is supported by improving service sector performance and ongoing manufacturing recovery [3] - Market expectations suggest a 50% chance of the European Central Bank (ECB) lowering rates again in December, with potential rate hikes anticipated by the end of 2026 [3] ECB Policy Predictions - Deutsche Bank has withdrawn its prediction for further ECB rate cuts, expecting the next policy action to be a rate hike in late 2026 [4] - Other financial institutions, including Goldman Sachs and BNP Paribas, have also revised their forecasts, indicating the end of the ECB's rate-cutting cycle [4] - Analysts note that trade agreements have diminished the rationale for further rate cuts by the ECB [4]

Core Insights - Australia's job advertisements surged to the highest level in 12 months in June, driven by strong growth in the private sector, indicating resilience in the labor market amid lower interest rates [1] Group 1 - The increase in job advertisements reflects a tightening labor market in Australia [1] - Economists from ANZ Bank expect the current easing cycle to be relatively shallow due to the overall resilience of the economy [1] - The Reserve Bank of Australia is anticipated to lower the overnight cash rate by 25 basis points in both July and August meetings [1]