This week Christine Lagarde is leaving her position as head of the IMF in order to become the President of the European Central Bank. Lagarde has reiterated something her predecessor, Mario Draghi, said multiple times - that governments need to also consider taking their own stimulus measures. She pointed out that countries such as Germany, the Netherlands, and a couple others have a budgetary surplus, and are thus in a great position to invest in the growth of their own economies. The new ECB chief has not said anything about further stimulus measures from the ECB yet.
Meanwhile, the slowdown in the global economy is also felt across the pond, in the United States. Today, the Federal Reserve is expected to cut interest rates for the third consecutive time in 2019. Investors are putting the likelihood of that happening at 90%. The Fed is using pre-emptive rate cuts to keep growth going and avoid a slowdown in the US economy.
Today’s anticipated rate decrease will most likely be the last one for now. The governors of the Federal Reserve are already showing a split position on these dovish measures. Moreover, since they are only preventative, economists consider the three cuts to be enough for now. Investors are also hoping that the US and China will reach a trade agreement, which would remove most of the uncertainty on the financial markets and calm the global economy.
In other news, the UK Parliament voted in favor of a general election to be held on December 12. Legislation for the elections will be passed this week, and Parliament will disband for the duration of the election campaign.
