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Powell Has Wall Street Buying View That Inflation Won’t Last

Federal Reserve Chairman Jerome Powell and his colleagues appear to be winning over investors with the argument that the current surge in consumer prices won’t last.



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Federal Reserve Chairman Jerome Powell and his colleagues appear to be winning over investors with the argument that the current surge in consumer prices won’t last.

When news broke that U.S. inflation climbed to 5% in May for the first time since 2008, yields on the key 10-year Treasury note moved in the opposite direction — falling to a three-month low of 1.43% on Thursday, before rising back up a bit early Friday. And while bond-market gauges of expected inflation edged upward, they remained well short of this year’s high reached in May.

That sanguine reaction is probably welcome news for Fed officials ahead of a June 15-16 interest-rate meeting – and it was bolstered Friday when a closely watched household survey showed that consumer expectations of inflation are declining too.

“Inflationary psychology takes some time to develop”

…said Richard Curtin, director of the University of Michigan survey. “It’s not an instant response among consumers.”

The Fed is widely expected to stick with an ultra-easy monetary stance next week, in pursuit of the twin goals of maximum employment and 2% average inflation. And they’ve been playing down risks that their policy could lead to a big and lasting overshoot on prices.

U.S. central bankers have been hammering home the message that higher inflation will mostly be transitory, the result of temporary bottlenecks as the economy reopens and low readings a year ago when it shut down.

‘Getting Comfortable’

“The best thing the Fed has done, the most effective, is that they stayed consistent around the transitory narrative,” said Peter Yi, director of short-duration fixed income and head of credit research at Northern Trust Asset Management, which oversees roughly $1 trillion.

Buttressing the Fed’s view, price increases in May were largely driven by categories where supply or demand has been skewed by the economy’s reopening, from used vehicles and household furnishings to airfares and apparel.

“A lot of the components that rose were the transitory ones,” said Yi. “More people in the market are now getting comfortable looking past these things.”

In a report to clients after the May data came out, JPMorgan Chase & Co. economist Daniel Silver agreed that the drivers of higher inflation are still mostly temporary — but added that “there is some firming taking place away from these factors as well,” pointing in particular to increases in rents.

Billionaire investor Stan Druckenmiller said the Fed’s easy-money measures have lulled investors into a false sense of security and distorted asset prices. “The market is not speaking right now,” Druckenmiller told CNBC television in an email Thursday.

In discussing the outlook for inflation, Fed officials have stressed the importance of expectations: If people believe that prices are headed sharply higher, they act in ways that help bring that about. So the absence of financial-market fears of a big run-up in prices is undoubtedly comforting.

But only up to a point. Policy makers –- perhaps especially Vice Chairman Richard Clarida — are well aware that the bond market does not give a completely clear reading of expectations, even among investors. It can be muddied by trader positioning, liquidity and other issues.

Flood of Cash

Indeed, financial strategists say bond yields have declined in recent days partly because of short-covering by investors who had previously bet on a move in the opposite direction.

The sheer flood of cash coming into the money markets — a fact that’s been highlighted by unprecedented usage of the Fed’s reverse repurchase agreement facility — is also a factor potentially supporting demand for Treasuries. Even at these levels, U.S. government debt offers more yield than many alternatives, including sovereign bonds in Japan and Europe.

Clarida, who served as global strategic adviser at Pacific Investment Management Co. before joining the Fed, is a self-declared “big fan” of a new index of common inflation expectations developed by central bank staff.

The index comprises 21 different measures of inflation expectations, including some drawn from the bond market, and is published quarterly. Clarida said last month that the index was in line with the Fed’s goal of an average inflation rate of 2%.

Unlikely, Not Impossible

Randal Quarles, the Fed’s other vice chairman, has said that he puts more weight on consumer surveys of inflation expectations than on readings from the bond market.

“Ultimately what drives inflation is peoples’ expectations about what they’re going to need in the way of wages,” Quarles told a Brookings Institution webinar on May 26. “Those are imperfectly measured, obviously, but better measured by surveys rather than market-based measures.”

The latest University of Michigan survey of consumer inflation expectations, published Friday, brought encouraging news for Fed officials. Respondents said they expected inflation to average 4% in the coming 12 months — still high by the standards of recent decades, but down from 4.6% a month earlier. Predictions for inflation in subsequent years also declined.

So far it seems unlikely that an inflationary psychology will develop, Curtin said. “But we can’t dismiss that issue out of hand.”


Haters Everywhere in Stock Market After S&P 500’s Big First Half

Wall Street strategists, never ones to restrain their enthusiasm when it’s warranted, warn that the gains have played out. Short sellers are circling, with wagers against the largest equity exchange-traded fund rising to the highest level this year.



People were already worried about equities six months ago. Now, after the S&P 500 Index defied everything from nosebleed valuations to inflation to post one of the best first halves ever, they’re downright paranoid.

Wall Street strategists, never ones to restrain their enthusiasm when it’s warranted, warn that the gains have played out. Short sellers are circling, with wagers against the largest equity exchange-traded fund rising to the highest level this year. Star investors like Michael Burry have warned of the “mother of all crashes” in meme stocks.

And yet, from reversals in speculative names to a hawkish shift in Federal Reserve policy, things that could have put an end to last year’s rally in equities have failed to. Instead, amid steadfast retail buying, about $6 trillion has been added to equity values in 2021, with the S&P 500’s 14% rally putting it on course for its second-best January through June period since 1998.

“The inflows of money are still so good,” “The money does not leave the market. It just looks for another place to go.”

Mike Wilson, chief U.S. equity strategist at Morgan Stanley, said in an interview on Bloomberg TV and Radio.

While bears are getting bolder, the bulls have history on their side. In the 27 years when gains in equities were this strong through the first six months, three-quarters of the time stocks continued to march higher by December.

The S&P 500 climbed for the fourth week in five as President Joe Biden’s bipartisan $579 billion infrastructure deal revived leadership in economically sensitive shares like banks and energy. The Russell 2000 Index of small-caps jumped more than 4%, the most since March, while the tech-heavy Nasdaq 100 advanced for six straight weeks, the longest winning streak in five months.

Valuations that started the year at 23 times earnings — near the highest since the dot-com era — have shrunk, thanks to the fastest profit expansion in a decade. Nevertheless, at 21, the current reading is still above the five-year average of 18. Moreover, this quarter likely marks the peak of a profit recovery from the pandemic recession, with forecast growth slowing from 63% now to 4% early next year.

Throw in the threat of tax hikes and Fed tapering, and it’s not hard to see why Wall Street strategists call for caution. Their average year-end target tracked by Bloomberg stood at 4,213, a 1.6% decline from the index’s last close.

Burry, who rose to fame on his winning mortgage bets from the 2007-2008 housing crash, joined the chorus this month, issuing a series of tweets warning individual investors about losses “the size of countries” in the event of crypto and meme-stock declines.

Short sellers, almost driven into extinction amid an equity rally and January’s short squeeze, are reloading. Bearish bets on the SPDR S&P 500 ETF have climbed to 5% of its stock outstanding, from less than 2% at the start of this year, according to IHS Markit data. Meanwhile, demand for protection against losses in coming months is rising in the options market.

“You’ve got a market that has kind of run ahead of itself,” said Kevin Caron, portfolio manager for Washington Crossing. “Now it’s more likely you’re going to get some volatility in the market for the next six months or so until earnings and fundamentals fill in under stock prices which have become quite rich.”

Yet pushing against the wall of worries are the growing numbers of retail traders who bought the dip during the pandemic bear market and have since become the staunchest allies of this bull market. A week ago, when the S&P 500 dropped more than 1%, retail investors poured a record $2 billion into equities, according to data compiled by Vanda Research.

And there is no indication they’re retreating soon. According to a report by investment adviser Betterment LLC, 58% of the 1,500 day traders surveyed plan to trade even more as pandemic restrictions are lifted. Only 12% said they expect to trade less.

Goldman Sachs Group Inc. strategists led by David Kostin raised their forecast for households’ net equity purchases for the full year to $400 billion from $350 billion after Fed data showed robust buying from the group.

“The trade-off households face between equities and other asset classes favors equities through year-end given anemic money market and credit yields,” Kostin wrote in the note. “Additionally, any signs of a sustained increase in inflation would favor equities over bonds or cash.”

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How A 2021 Recession Will Happen

In economics, a recession is a business cyclecontraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock).



In economics, a recession is a business cyclecontraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock).

This may be triggered by various events, such as a financial crisis, an external trade shock, an adverse supply shock, the bursting of an economic bubble, or a large-scale anthropogenic or natural disaster (e.g. a pandemic). In the United States, it is defined as “a significant decline in economic activity spread across the market, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales”. In the United Kingdom, it is defined as a negative economic growth for two consecutive quarters.

Governments usually respond to recessions by adopting expansionary macroeconomic policies, such as increasing money supply or increasing government spending and decreasing taxation.

Put simply, a recession is the decline of economic activity, which means that the public has stopped buying products for a while which can cause the downfall of GDP after a period of economic expansion (a time where products become popular and the income profit of a business becomes large). This causes inflation (the rise of product prices). In a recession, the rate of inflation slows down, stops, or becomes negative.

The National Bureau of Economic Research (NBER) defines a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in the real gross domestic product (GDP), real income, employment, industrial production, and wholesale-retail sales.” A recession is also said to be when businesses cease to expand, the GDP diminishes for two consecutive quarters, the rate of unemployment rises, and housing prices decline.

  • A recession is in essence a rash of simultaneous failures of businesses and investment plans. 
  • Explaining why they happen, and why some many businesses can fail at once, has been a major focus of economic theory and research, with several competing explanations.
  • Financial, psychological, and real economic factors are at play in the causes and effects of recessions.
  • Causes of the incipient recession in 2020 include the impact of Covid-19 and the preceding decade of extreme monetary stimulus that left the economy vulnerable to economic shocks. 

The nature and causes of recessions are simultaneously obvious and uncertain. Recessions are in essence a cluster of business failures being realized simultaneously. Firms are forced to reallocate resources, scale back production, limit losses and, usually, lay off employees. Those are the clear and visible causes of recessions. There are several different ways to explain what causes a general cluster of business failures, why they are suddenly realized at the same time, and how they can be avoided. Economists disagree about the answers to these questions and several different theories have been offered.

Macroeconomic and Microeconomic Signs of a Recession 

The standard macroeconomic definition of a recession is two consecutive quarters of negative GDP growth. Private business, which had been in expansion prior to the recession, scales back production and tries to limit exposure to systematic risk. Measurable levels of spending and investment are likely to drop and a natural downward pressure on prices may occur as aggregate demand slumps. GDP declines and unemployment rates rise because companies lay off workers to reduce costs.

At the microeconomic level, firms experience declining margins during a recession. When revenue, whether from sales or investment, declines, firms look to cut their least-efficient activities. A firm might stop producing low-margin products or reduce employee compensation. It might also renegotiate with creditors to obtain temporary interest relief. Unfortunately, declining margins often force businesses to fire less productive employees.

General Causes of Recessions 

In general, the major economic theories of recession focus on financial, psychological, and real economic factors that can lead to the cascade of business failures that constitute a recession. Some theories look at long term economic trends that lay the groundwork for recession in the years leading up to it, and some look only at the immediately visible factors that appear at the onset of a recession. Many or all of these various factors may be at play in any given recession.

Financial factors can definitely contribute to an economy’s fall into a recession, as we found out during the U.S. financial crisis. The overextension of credit and debt on risky loans and marginal borrowers can lead to enormous build-up of risk in the financial sector. The expansion of the supply of money and credit in the economy by the Federal Reserve and the banking sector can drive this process to extremes, stimulating risky asset price bubbles. And when the music stops the repercussions can carry over into the real economy. 

Even worse, artificially suppressed interest rates during the boom times leading up to a recession can distort the structure of relationships among businesses and consumer by making business projects, investments, and consumption decisions that are interest rate-sensitive, such as the decision to buy a bigger house or launch a risky long term business expansion, appear to be much more appealing than they ought to be. The ultimate failure of these decisions when rates rise to reflect reality constitutes a major component of the rash of business failures that make up a recession

Psychological factors are frequently cited by economists for their contribution to recessions also. The excessive exuberance of investors during the boom years that bring the economy to its peak, and the reciprocal doom-and-gloom pessimism that sets in after a market crash at a minimum amplify the effects of real economic and financial factors as the market swings. Moreover, because all economic actions and decisions are always to some degree forward looking, the subjective expectations of investors, businesses, and consumers are always involved in the inception and spread of an economic downturn.

Real changes in economic fundamentals, beyond financial accounts and investor psychology, also make critical contributions to a recession. Some economists explain recessions solely as a result of real economic shocks, such as disruptions in supply chains, and the damage they can cause to a wide range of businesses. Shocks that impact key industries such as energy or transportation can have such widespread effects that they cause many businesses across the economy to retrench and cancel investment and hiring plans simultaneously, with ripple effects on workers, consumers, and the stock market.

Some real economic factors can also be tied back into financial markets. Because market interest rates represent not only the cost of financial liquidity for businesses, but also the time preferences of consumers, savers, and investors for present versus future consumption, artificial suppression of interest rates by a central bank during the boom years before a recession distorts not just financial markets but real business and consumption decisions.

In turn, the real preferences of consumers, savers, and investors place limits on how far such an artificially stimulated boom can proceed. These manifest as real economic constraints on continued growth, in the form of labor market shortages, supply chain bottlenecks, and spikes in commodity prices (which lead to inflation) when not enough real resources can be made available to support all the overstimulated business investment plans based on easy-money policies. Once these set in, a rash of business failures begins in the face of increased production costs and the economy tips into recession. 

Some Causes of the Current Recession 

Though an official recession has not yet been declared, the economy is clearly heading in that direction. A major cause is obviously evident in the real economic shock of the widespread disruption of global and domestic supply chains and direct damage to businesses across all industries, due to the Covid-19 epidemic and the public health response. Both the impact of the epidemic and the fear and uncertainty surrounding it are important. 

But a major underlying cause is also the overextension of supply chains, the overinvestment in marginal business, and the razor-thin inventories and fragile business models that have all become the norm over the decade of extreme low interest rates and monetary policy by central banks everywhere, and especially the Federal Reserve, since the last recession. The deep distortions in business, investment, and consumer behavior, that by 2020 have all become thoroughly addicted to an endless flow of easy money, laid the groundwork for the economic devastation that is currently underway by leaving the economy with zero margin of resilience to buffer against negative economic shocks.

During the COVID-19 pandemic of 2020, the U.S. economy suffered from intermittent lockdowns, business regulations, widespread unemployment, travel and trade restrictions, and international market fluctuations (not to mention social and political unrest). Gross domestic product saw its first fall since the recession of 2007-2009 by a massive 3.5%—the largest single drop since 1947—and consumer spending fell to its lowest rate since the Great Depression.

With an economic downturn of that scale, your life would change dramatically. One out of every four people you know would lose their job. Economic output would plummet. International trade would shrink drastically.

In the wake of the COVID-19 pandemic, could it happen again? Some consumers fear another recession, or worse. Most experts, however, foresee a less drastic outcome. Here are a few reasons why that fear persists, as well as some reasons why it may be proven wrong.

  • Structural unemployment, volatile oil prices, and fickle stock markets contribute to the belief that a second Great Depression is imminent.
  • Lockdown restrictions and work-from-home culture is forging a housing market reminiscent of the bubble that caused the 2007-2008 recession.
  • Economic growth hinges on the health of small businesses, including the ability to adapt to remote work.
  • Climate change poses a substantial threat to the global economy.
  • The pandemic has disparate effects on different industries and populations, but there are measures you can take to protect yourself financially.

Concerning Economic Signs 

The circumstances that produce a depression are far more complex than a simple designation by facts and figures. Some warning signs of a sinking economy include declining consumer confidence, rapid inflation, decreased employment, declines in GDP, dips in the stock market, and shifting interest rates, among others. The U.S. saw many of these signs in 2020 and 2021. Additionally, the unique nature of the pandemic brought its own set of unprecedented economic concerns.


In the initial months of the pandemic, the rate of unemployment increased sharply, reaching a height of 14.8% in April 2020. Surprisingly, as the pandemic dragged on, this figure fell, landing at 6.2% as of February 2021, but experts theorize that statistics may reflect a different reality than the percentage of the population that is actually working. Thousands of discouraged workers gave up looking for work and were no longer counted in the unemployed numbers, driving the labor participation rate down.

A more accurate measure of the effect of the pandemic on unemployment may be found in the nature of the unemployed population, and in long-term trends. Since April 2020, the rate of long-term unemployment has seen a dramatic rise. As of February 2021, almost 42% of the unemployed have been looking for work for six months or more, a mass threatening to reach the previous peak of 45.5% in 2010.

Stock Market Volatility 

Financial losses during the 2008 stock market crash were devastating. The Dow dropped 53% from its high of 14,043 in October 2007 to 6,594.44 in March 2009. It dropped 777 points during intra-day trading on September 29, 2008—at the time, its largest one-day drop ever. Investors who lost money are understandably still spooked by that experience, and more extreme volatility in the market in 2020 has only reignited that fear.

2020 saw two of the top five largest one-day daily percentage losses in the history of the Dow. By comparison, the worst percentage drop during the 2007-2008 crisis came in 11th on the list. On March 16, 2020, the Dow plummeted nearly 3,000 points, shattering all previous point-loss records.

The Dow has been trending upward since, reaching a valuation of 32,862.21 in March 2021, but with such recent volatility it may be too early for investors to feel secure.

Oil Prices 

Oil prices have also been volatile. They rose to $50 a barrel after plummeting to a 13-year low of $26.55 per barrel in January 2016. That was just 18 months after a high of $100.26 per barrel in June 2014.

The onset of the pandemic had a dramatic impact on the price of oil. An increase in supply from U.S. shale oil producers combined with the strength of the U.S. dollar pushed prices way down. For a short span in April 2020, the price of a barrel fell into negative numbers, essentially meaning it was worth less than the cost to purchase, ship, and store it—a reality that flummoxed many. The price has since increased again, reaching heights of $66 a barrel in March 2021. Forecasts suggest that oil prices could surge to $100 per barrel at some point in 2021.

A Confused Housing Market 

In a trend seemingly inconsistent with other economic indicators, the housing market during the pandemic fared well; sales went up, values increased, and foreclosure rates decreased.Perhaps the relative stability of the housing market during the pandemic shouldn’t be surprising, as most people were spending more time at home and saving money that might otherwise be spent on travel, retail, or entertainment. Also, as interest rates dipped to record-breaking lows, mortgage loans and refinancing opportunities became much more appealing.

However, skeptics recall the 2008 subprime mortgage crisis, when a housing bubble was sharply followed by a bust, and then a collapse. Many homeowners were upside-down in their mortgages, unable to sell their homes or refinance. The housing collapse was caused by mortgage financing reliant upon mortgage-backed securities. After 2008, banks stopped purchasing them on the secondary market. As a result, 90% of all mortgages were guaranteed by Fannie Mae or Freddie Mac. The government took ownership, but banks still aren’t lending without Fannie or Freddie guarantees.

In effect, the federal government is still supporting the U.S. housing market. Mortgage rates are on a slight increase in 2021, so whether the housing market levels out or bursts is yet to be seen.

Tentative Business Growth 

After the 2008 recession, business credit froze up. Demand for any asset-backed commercial paper disappeared. The panic over the value of these commercialized debt obligations led to the financial sector’s crisis, causing the Federal Reserve and the Treasury to intervene. The governments of the world stepped in to provide all the liquidity for frozen credit markets. U.S. debt was downgraded. Europe wasn’t much better. Even worse, all that addition to the money supply never found its way into the regular economy. Banks sat on cash, unwilling to lend. They eventually paid back the $700 billion bailout.

During the pandemic, similar patterns caused business to suffer severely, with about 23% of small business owners claiming an overall loss in 2020.

5 Reasons Why the Depression Could Recur 

Taking into account the factors listed above, there are a few main reasons why the United States could see another depression.

  • Stock market crashes can wipe out investors’ life savings and destroy the confidence required to get the economy going again. Crashes also make it difficult for companies to raise the needed funds to grow. Extreme market volatility in 2020, and its effect on investor confidence into 2021, suggests that this remains an ongoing concern.
  • High oil prices could continue to spike, which impacts everything from car sales to inflation to global market volatility.
  • With banks still digesting the losses of the 2007-2008 subprime mortgage crisis, and the potential increase in foreclosures once the CARES moratorium is lifted, banks may continue to hoard cash in spite of a growing housing market.
  • Small businesses are in recovery mode, and their ongoing viability is highly dependent on government assistance and stimulus programs. Without reliable credit, small businesses can’t grow, stifling the roughly 47% of jobs that they provide.
  • Deflation is a looming threat. These deflationary pressures seem like a boon to consumers, but they make it difficult for businesses to raise wages. The jury is still out on whether the CARES stimulus checks will lead to inflation, which goes hand in hand with the value of the U.S. dollar in the global marketplace.

What About Climate Change? 

There is a long-term threat that could cause another Great Depression, which is the worsening peril from climate change. According to a 2018 study by Stanford University Department of Earth System Science researchers, if the world’s nations adhered to the Paris Climate Agreement, and temperatures only rose 2.5%, then the global gross domestic product would fall 15%. If nothing is done, temperatures will rise by four degrees Celsius by 2100. Global GDP would decline by more than 30% from 2010 levels, which would be worse than the Great Depression, when global trade fell 25%. The major difference this time around is that it would be permanent.

In addition, failure to adhere to international policy agreements or EPA standards could impose sanctions which may fall heavily on certain industries, such as fishing, fossil fuels, manufacturing, etc. Meteorological impacts have the potential to create widespread destruction, pulling massive government resources. In 2021 the U.S. spent an estimated $1 billion on 22 weather disasters linked to climate change.

5 Reasons Why the Depression Won’t Recur 

There are also plenty of reasons to believe that we are not in danger of seeing a depression anytime soon.

  • Housing prices and foreclosures have recovered. Rental rates are relatively high, which has brought investors back to the housing market. With restored confidence, housing prices continue to rise. After median sales prices dropped to a low of $208,400 in the first quarter of 2009, they reached $346,800 in the fourth quarter of 2020.
  • Business credit has been affected, but due to the international scale of the pandemic, and the increasingly globalized marketplace, the world’s central banks have pumped in much of the liquidity needed.
  • In 2021, with vaccinations increasing, stay-at-home restrictions being lifted, and businesses reopening, more small business owners are confident that they will recover from the setbacks incurred during 2020.
  • Unlike the contractionary monetary policies that caused the Great Depression, current monetary policy is expansionary. The FDIC helps prevent bank runs by insuring deposits.
  • Economic output fell 4% from its high of $14.4 trillion in the second quarter of 2008 to its low of $13.9 trillion a year later. As of the last available count in the fourth quarter of 2020, it has recovered to almost $22 trillion.

How to Protect Yourself From A Depression

As the country starts to recover from the effects of the pandemic, so will the economy. Your lifestyle may have changed, and your personal finances may be in recovery mode, but there are tried and true principles that can help you dig out of a hole and prepare for potential tough times in the future.

  • Practice budgeting: increase your income and reduce your spending.
  • If you have a surplus, reduce your debt.
  • Make sure you have a savings cushion, and then build more. The best investment is still a diversified portfolio.
  • If you need to borrow money, be minimal, be mindful of good debt vs. bad debt, and seek out low interest rates.
  • Only buy a house you can easily afford; mortgage aside, downsizing has ripple effects on your overall spending.

Ultimately, the economy is always susceptible to uncertainty, and now more than ever due to climate change. The best way to prepare is to secure resources and remain flexible.

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ECB Rate-Cut Bets Fade Into Obscurity on Global Growth Outlook



The increments may be small, but money-market traders are pricing rate hikes in Europe again.

The European Central Bank’s deposit rate will rise by over one basis point in twelve months’ time, Eonia swaps show. That’s the highest reading in more than two years and a far cry from six months ago, when the market was positioned for 10 basis points of easing.

The shift in expectations is being fulled by optimism over the economic recovery, with prices in the region rising at their fastest pace since 2018. It also reflects the quicker path of tightening signaled by the Federal Reserve last week, which is putting upward pressure on rates markets globally.

While money market traders haven’t erased rate-cut bets completely — with less than a single basis point of easing seen at the next two policy meetings — the latest pricing is a sea change for a region that’s been mired in below-target inflation for years.

In the ECB’s latest meeting, President Christine Lagarde stressed that the recent spike in prices was transitory. This week, she said the policy maker has room to cut rates if needed.

The ECB’s deposit rate has remained at 0.5% since September 2019, when former President Mario Draghi slashed borrowing costs to help stoke inflation and growth.

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