Core Insights - Major central banks, including the European Central Bank (ECB), the Federal Reserve (Fed), the Bank of Japan (BoJ), and the Bank of Canada, are adopting different monetary policy strategies amid stable inflation paths and high external uncertainties, indicating a new phase of data dependency and risk assessment in global monetary policy [1] Group 1: European Central Bank (ECB) - The ECB decided to keep the deposit facility rate unchanged at 2.00%, with the main refinancing rate and marginal lending rate also held steady at 2.15% and 2.40%, respectively, marking the third consecutive meeting without changes [2] - The ECB emphasized that its policy stance will rely on data and be assessed at each meeting, without pre-setting the interest rate path [2] - The ECB's asset purchase programs are being reduced in an orderly and predictable manner, as the euro system has ceased reinvesting the principal of maturing securities [2] Group 2: Federal Reserve (Fed) - The Fed announced a 25 basis point reduction in the federal funds rate target range to 3.75%–4.00%, marking the second consecutive rate cut, which aligns with market expectations [3] - The Fed noted that economic activity is expanding at a moderate pace, with employment growth slowing and the unemployment rate slightly rising, while inflation remains relatively high [3] - The Fed plans to end its balance sheet reduction operations by December 1, 2025, marking the conclusion of a three-year quantitative tightening period, during which its securities holdings decreased by $2.2 trillion [3][4] Group 3: Bank of Japan (BoJ) - The BoJ decided to maintain its policy rate at 0.5%, with a vote of 7 in favor and 2 against, amid increasing calls for rate hikes from some committee members [5] - The BoJ's governor stated that Japan's economy is experiencing moderate recovery but still shows signs of weakness, with inflation exceeding the 2% target for 41 consecutive months [5] - The timing of any future rate hikes will be based on data rather than a predetermined schedule, with upcoming wage negotiations being a key variable for assessing sustainable consumption and inflation [5] Group 4: Bank of Canada - The Bank of Canada lowered its key overnight rate by 25 basis points to 2.25%, the lowest level since July 2022, in response to the impact of U.S. trade policies on the Canadian economy [7] - The Bank of Canada significantly revised its GDP growth forecasts downwards, projecting a growth rate of 1.2% for 2025 and 1.1% for 2026, while maintaining an inflation target of around 2% [7] - The governor indicated that monetary policy cannot fully offset the structural damage caused by trade wars, and the unpredictability of U.S. trade policies adds to economic forecasting uncertainty [7] Group 5: Policy Divergence and Economic Outlook - Central banks are implementing differentiated strategies to address their unique structural challenges, emphasizing "no preset paths" and "data dependency," reflecting a cautious approach to economic outlooks [8] - The upcoming December meetings are expected to be critical observation points for potential shifts in policy direction as key economic data resumes publication [8]

Core Viewpoint - European Central Bank (ECB) policymakers should not rely on the Transmission Protection Instrument (TPI) to address fiscal issues, as these matters should be resolved by politicians themselves [1]. Group 1: ECB's Stance on Fiscal Issues - ECB's TPI is available for temporary use under certain conditions, but it is not a solution for all fiscal problems [1]. - The notion that the ECB can resolve fiscal issues is considered overly simplistic by ECB policymaker Slöpfen [1]. Group 2: Implications of Low Interest Rates - The cost of implementing quantitative easing (QE) is high, especially considering the impact of low interest rates on financial stability [1]. - If policy rates approach 0% again, the ECB will need to carefully consider the deployment of its tools based on past experiences [1].

Core Viewpoint - The European Central Bank (ECB) has decided to maintain its interest rates, indicating a consensus on the current policy stance and signaling a pause in the rate-cutting cycle as inflation approaches target levels [3][5]. Interest Rate Decision - The ECB kept the deposit facility rate at 2%, the main refinancing rate at 2.15%, and the marginal lending rate at 2.40%, aligning with market expectations [3]. - This marks the second consecutive meeting where rates have been held steady following a pause in rate cuts since July [3]. Inflation Outlook - ECB President Lagarde stated that the process of reducing inflation has concluded, with current inflation levels nearing the bank's target [5]. - The ECB's latest forecasts predict Eurozone inflation to average 2.1% in 2025, 1.7% in 2026, and 1.9% in 2027, with core inflation (excluding food and energy) expected to be 2.4% in 2025, dropping to 1.9% in 2026 and 1.8% in 2027 [5]. Asset Purchase Programs - The ECB is gradually reducing its Asset Purchase Program (APP) and Pandemic Emergency Purchase Program (PEPP) portfolios at a stable and predictable pace [6]. - Lagarde noted that the sovereign bond market in the Eurozone is functioning orderly, and there was no discussion of the Transmission Protection Instrument (TPI) during the meeting [6]. Economic Growth Projections - The Eurozone's economic growth forecast for 2025 has been revised upward to 1.2%, from a previous estimate of 0.9%, reflecting improved business activity and consumer confidence [9]. - Growth expectations for 2026 have been slightly downgraded to 1.0%, while the 2027 forecast remains at 1.3% [9]. External Risks - Market participants believe the ECB has entered a period of policy observation, with a less than one-third chance of another rate cut this year [8]. - There are concerns regarding external risks, including potential impacts from U.S. monetary policy and geopolitical uncertainties, which could affect the Eurozone's economic recovery [8][9].

Core Viewpoint - The European Central Bank (ECB) has decided to maintain its key interest rates, indicating a consensus on the current policy stance and signaling a pause in the rate-cutting cycle as inflation approaches target levels [1][2] Interest Rate Decision - The ECB kept the deposit facility rate at 2%, the main refinancing rate at 2.15%, and the marginal lending rate at 2.40%, aligning with market expectations [1] - This marks the second consecutive meeting where rates have been held steady following a pause in rate cuts in July [1] Inflation Outlook - ECB President Lagarde stated that the process of reducing inflation has concluded, with current inflation levels nearing the bank's target [2] - The latest forecasts predict Eurozone inflation to average 2.1% in 2025, 1.7% in 2026, and 1.9% in 2027, with core inflation (excluding food and energy) expected to be 2.4% in 2025, dropping to 1.9% in 2026, and 1.8% in 2027 [2] Asset Purchase Programs - The ECB is gradually reducing its Asset Purchase Program (APP) and Pandemic Emergency Purchase Program (PEPP) portfolios at a stable and predictable pace [2] - Lagarde noted that the sovereign bond market in the Eurozone is functioning orderly, and there was no discussion of the Transmission Protection Instrument (TPI) during the meeting [2] Economic Growth Projections - The Eurozone's economic growth forecast for 2025 has been revised upward to 1.2% from 0.9%, reflecting improved business activity and consumer confidence [4] - Growth expectations for 2026 have been slightly downgraded to 1.0%, while the 2027 forecast remains at 1.3% [4] - Recent data indicates that Eurozone business activity continued to expand in August, with German business confidence reaching its highest level since 2022, showcasing resilience amid trade tensions and geopolitical challenges [4] External Risks - Market participants believe the ECB has entered a period of policy observation, with a low probability of further rate cuts this year [3] - However, there are mixed internal views, with some officials suggesting potential rate cuts in December if the Euro continues to strengthen or external uncertainties increase [3] - External challenges include anticipated rate cuts by the Federal Reserve, which could reignite Euro appreciation, and new U.S. tariffs and immigration policies that may heighten economic uncertainty in Europe [3]

Core Viewpoint - The European Central Bank (ECB) has lowered its key interest rates by 25 basis points, marking the seventh rate cut since June 2024, indicating a shift in focus from controlling inflation to supporting growth amid persistent inflation and external risks [1][2]. Interest Rate Changes - As of April 23, the ECB's three key interest rates are now set at 2.25% for the deposit facility rate, 2.40% for the main refinancing rate, and 2.65% for the marginal lending rate [1]. - This decision reflects a consensus among market participants and policymakers regarding the complex economic situation [1]. Inflation and Economic Outlook - Recent data shows a decline in both overall and core inflation rates in the Eurozone, with service sector price increases easing significantly [2]. - Potential inflation indicators suggest that price trends are gradually aligning with the ECB's medium-term target of 2% [2]. - However, the overall growth outlook for the Eurozone remains challenging, with geopolitical conflicts and rising trade barriers suppressing business investment and consumer spending [2]. Economic Indicators - The S&P Global's April Purchasing Managers' Index (PMI) for the Eurozone fell to 50.1, indicating a stagnation in economic activity, primarily due to unexpected contractions in the service sector, particularly in Germany and France [3]. - The ECB's rate cut is viewed as a preemptive defensive measure aimed at stabilizing market expectations and mitigating economic downturn risks [3]. Policy Coordination and Structural Challenges - Despite the rate cut signaling a shift towards monetary easing, the ECB acknowledges existing structural constraints and calls for enhanced fiscal coordination among member states [4]. - The ECB emphasizes the need for governments to prioritize green transitions, technological innovation, and digital infrastructure development [4]. - The ECB's policy documents highlight the importance of a robust fiscal framework to bolster market confidence and complement monetary policy efforts [4].