{"id":9881,"date":"2025-02-05T11:39:15","date_gmt":"2025-02-05T11:39:15","guid":{"rendered":"https:\/\/tst.finantia.es\/blog\/2025\/02\/05\/analysis-of-the-fed-and-ecb-meetings-january-2025-2\/"},"modified":"2026-07-02T11:34:34","modified_gmt":"2026-07-02T11:34:34","slug":"analysis-of-the-fed-and-ecb-meetings-january-2025-2","status":"publish","type":"post","link":"https:\/\/www.finantia.es\/en\/2025\/02\/05\/analysis-of-the-fed-and-ecb-meetings-january-2025-2\/","title":{"rendered":"Analysis of the Fed and ECB Meetings: January 2025"},"content":{"rendered":"

As widely expected, the ECB announced another 25 basis point rate cut (the fourth consecutive), leaving the\u00a0deposit facility rate<\/span>\u00a0at 2.75%. The decision was justified by the weak short-term assessment of economic activity and fragile growth and consumer confidence prospects, which are negatively affecting consumption in the region.<\/p>\n

Regarding inflation, Christine Lagarde noted that the acceleration observed in December was expected due to energy price volatility. She added that recent data point to a decline in wage pressures, which is expected to lead to a reduction in\u00a0core\u00a0<\/span>inflation. The expectation remains that inflation will reach the 2% target this year. Lagarde also dismissed the possibility of a \u201cstagflation\u201d scenario in the euro area.<\/p>\n

The decision to cut rates by 25 basis points was \u201cunanimous,\u201d and according to Lagarde, the possibility of a 50 basis point cut was not even considered. The central bank described current rates as \u201crestrictive,\u201d leaving the door open for further cuts. However, Lagarde noted that it is still premature to discuss the terminal rate, as decisions will be made on a meeting-by-meeting basis.<\/p>\n

Overall, both the outcome of the meeting and the press conference were in line with market expectations. Attention is now focused on what the neutral rate for the region will be, given current economic conditions, and on the possible need for the ECB to move rates below the neutral rate in order to stimulate the stagnant euro area economy\u2014an idea that Lagarde did not entirely rule out.<\/p>\n

The ECB is scheduled to meet again on March 6, and another 25 basis point rate cut is expected.<\/p>\n

\n

Across the Atlantic, Fed Chair Powell announced, as expected, that the Fed would keep rates stable in the 4.25\u20134.50% range. Powell considers the U.S. economy to remain robust, growing at a \u201csolid pace\u201d (2% in 2024). Although the labor market does not currently pose inflationary pressures, the conditions for the Fed to lower interest rates have not yet been met, which would require, for example, an unexpected labor market downturn or inflation below expectations. On this latter point, Powell stated that the disinflation process remains \u201cslow and sometimes uneven,\u201d also indicating that no significant progress has been made in this regard.<\/p>\n

Powell also noted that the Fed is in no \u201crush to adjust monetary policy,\u201d following the 1% rate cut at the end of 2024, and reiterated that they are not on a \u201cpre-determined path.\u201d Furthermore, he stated that monetary policy is currently \u201cwell calibrated\u201d to achieve both of the Fed\u2019s objectives and is \u201csignificantly\u201d above the neutral rate, possibly signaling an extended pause in the rate-cutting cycle.<\/p>\n

Regarding the economic impact of Trump\u2019s policies on U.S. inflation and the labor market, Powell noted that the Fed team has already considered a range of possibilities; however, they can only take action once there is greater clarity and sufficient economic data to respond.<\/p>\n

The next FOMC meeting is scheduled for March 19, and markets are not anticipating any rate cuts at that meeting, continuing to price in an extended pause in the rate-cutting cycle.<\/p>\n

\n

\n

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This communication has been produced by Banco Finantia for informational purposes only and does not constitute investment advice. In preparing this communication, no consideration was given to investors\u2019 investment goals, financial situations, or specific needs. Accordingly, the information has not been tailored to any actual or potential investor, nor have any specific circumstances relating to such investors been taken into account.<\/small><\/p>\n

The information disclosed is based on market conditions prevailing at the time, as well as on information obtained from recognised third-party entities, which are public sources. Banco Finantia has not independently verified the data or information provided by those entities. As the recipient of this communication is aware of this situation, Banco Finantia cannot, under any circumstances, be held liable for any errors, omissions, or inaccuracies contained in this document or arising from the use of such information. Banco Finantia accepts no responsibility for any direct or indirect losses or damages that may be incurred by those who carry out transactions based on the information provided.<\/small><\/p>\n

Banco Finantia\u2019s investment policy, whether acting on its own account or on behalf of its clients, is entirely independent of the content of this communication. The Banco Finantia Group may hold positions in, or trade, the securities or financial instruments referred to herein, before or after the issuance of this communication, and may also provide, or seek to provide, banking services to the issuers of such securities or financial instruments.<\/small><\/p>\n

Banco Finantia\u2019s competent supervisory authority is the CMVM, with which it is registered under number 109.<\/small><\/p>\n","protected":false},"excerpt":{"rendered":"

As widely expected, the ECB announced another 25 basis point rate cut (the fourth consecutive), leaving the\u00a0deposit facility rate\u00a0at 2.75%. The decision was justified by the weak short-term assessment of economic activity and fragile growth and consumer confidence prospects, which are negatively affecting consumption in the region. Regarding inflation, Christine Lagarde noted that the acceleration […]<\/p>\n","protected":false},"author":10,"featured_media":6999,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[93],"tags":[100,102,101],"class_list":["post-9881","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles","tag-corporate-banking","tag-ecb","tag-fed"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.finantia.es\/en\/wp-json\/wp\/v2\/posts\/9881","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.finantia.es\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.finantia.es\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.finantia.es\/en\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/www.finantia.es\/en\/wp-json\/wp\/v2\/comments?post=9881"}],"version-history":[{"count":1,"href":"https:\/\/www.finantia.es\/en\/wp-json\/wp\/v2\/posts\/9881\/revisions"}],"predecessor-version":[{"id":10363,"href":"https:\/\/www.finantia.es\/en\/wp-json\/wp\/v2\/posts\/9881\/revisions\/10363"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.finantia.es\/en\/wp-json\/wp\/v2\/media\/6999"}],"wp:attachment":[{"href":"https:\/\/www.finantia.es\/en\/wp-json\/wp\/v2\/media?parent=9881"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.finantia.es\/en\/wp-json\/wp\/v2\/categories?post=9881"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.finantia.es\/en\/wp-json\/wp\/v2\/tags?post=9881"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}