Interest rates are a critical variable for all economic players (companies, investors, individuals, governments…). They have a direct impact on key parameters such as economic growth, inflation, the evolution of corporate profits and markets, or borrowing levels. For instance, the performance of short and long-term rates determines the extent to which house prices fluctuate, and in which direction. They also affect fiscal deficits and, therefore, taxation. Moreover, the high sensitivity of stock portfolios (or the assets of many individuals) to interest rates also proves their influence on the lives of many economic agents. As such, it is essential to monitor them and understand both their drivers and effects. In other words, to accurately anticipate their moves. This is especially important in this uncertainty-plagued environment with potential turning points in the horizon.
In this sense, the aforementioned uncertainty is illustrated by the fact that, while on December 2018 the markets were discounting three official interest rate hikes in the US in 2019, they are currently anticipating ... three decreases.
Thus, on the week of 3 June 2019 the US and Eurozone central banks made crucial monetary policy and interest rates-related announcements, with noteworthy implications for all players. We have analysed their causes and the main future effects from different angles in the report "Repercussions of Last Week's Key Announcements by the ECB and the Fed"