Ben Nichols, managing director of specialist mortgage investment company RAW Capital Partners, responds to today’s decision by the European Central Bank to reduce its key deposit Rate by 25 Basis Points to 3.5 per cent.
Sirs,
Today’s decision by the European Central Bank aligned with market expectations, and recent macroeconomic data – such as Q2 GDP growth of 0.3 per cent in the Eurozone – supports the ECB’s ongoing monetary easing strategy. Although inflation hasn’t yet hit the central bank’s 2 per cent target, the Eurozone appears to be on a stable path to recovery, with GDP projected to grow by 1 per cent in 2024.
With the Bank of England already cutting rates and the Federal Reserve expected to follow suit next week, we’re entering a new phase of global monetary policy. This is likely to provide some impetus to global economic growth, but there is a catch: central banks will continue cutting rates at different speeds in the coming months, which could trigger some volatility in the financial markets.
For global investors, therefore, the situation calls for agility and diversification to manage the risks posed by any unforeseen macroeconomic headwinds that could emerge.
A balanced portfolio that combines traditional and alternative investments could prove key to mitigating downside risks and capitalising on the opportunities created by the ECB’s rate cut cycle.
Ben Nichols
Managing Director
RAW Capital Partners
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