Bank of Canada reduces key interest rate to 4.75% on June 5, 2024
ECB and Bank of Canada considering rate cuts
ECB expected to reduce interest rate by 0.25% on June 6, 2024
ECB's decision may impact other rich-world economies including the US Federal Reserve
Inflation in eurozone falls to 2.6% in May
The European Central Bank (ECB) and the Bank of Canada are both considering cutting interest rates in response to decreasing inflation. The ECB is expected to make the first move on Thursday, June 6, 2024, with a predicted quarter-point reduction from the current record high of 4%. This decision comes after inflation in the eurozone fell to 2.6% in May and is within range of the ECB's goal of 2%. The Bank of Canada made its first rate cut since March 2020 on June 5, reducing its key interest rate to 4.75%. Both banks have signaled that more cuts could follow if inflation continues to ease. However, lowering rates too quickly could jeopardize progress made in fighting inflation.
The European Central Bank's decision will impact the eurozone economy and potentially influence other rich-world economies, including the United States. The Federal Reserve is not expected to cut rates at its next policy meeting on June 11-12 as it battles inflation that remains above its 2% target.
European stocks were higher on Thursday, with traders anticipating the ECB's rate cut. Health-care stocks led the gains, with Danish pharmaceuticals giant Novo Nordisk climbing 3.5% to hit a fresh record high amid continued demand for its Wegovy weight loss drugs.
In contrast, mortgage rates in the United States remain high and are unlikely to fall significantly after the June Federal Reserve meeting. Experts believe it's unlikely that the Fed will make a rate cut just yet due to persistent inflation and unemployment remaining unchanged. Mortgage rates are currently around 7%, and they may stay within this range for some time.
The Bank of Canada has lowered its key interest rate to 4.75% marking the bank’s first rate cut since March 2020.
Bank governor Tiff Macklem hinted that more rate cuts could follow, citing cooling inflation.
Quarterly GDP numbers released last week were weaker than expected: the economy grew by 1.7% during the first three months of the year, increasing the likelihood of a cut.
RBC, Scotiabank, BMO, TD Bank and CIBC had cut their prime lending rates to 6.95% from 7.20% as of 3 p.m. ET on Wednesday.
Bank of Canada governor Tiff Macklem stressed that the Bank of Canada is going to take things ‘one meeting at a time’ and that Canadians can reasonably expect more cuts so long as inflation continues to ease and the bank maintains its confidence that inflation is steadily approaching the bank’s two% goal.
Macklem also stated that lowering rates too quickly could jeopardize progress made in fighting inflation.
The European Central Bank plans to cut interest rates on Thursday, making the eurozone the largest rich-world economy to start easing borrowing costs for businesses and consumers as inflation from Russia’s invasion of Ukraine recedes.
ECB President Christine Lagarde and officials have signaled a quarter-point rate cut from the current record high of 4%.
Inflation in the eurozone has fallen to 2.6% in May, down from a peak of 10.6% in October 2022 and within range of the ECB’s goal of 2%.
The Federal Reserve faces a different economy and is not expected to cut rates at its next policy meeting on June 11-12, as it battles inflation that remains above its 2% target.
Accuracy
No Contradictions at Time
Of
Publication
Deception
(100%)
None Found At Time Of
Publication
Fallacies
(95%)
The article contains an appeal to authority fallacy when it states 'Analysts say a quarter-point cut on Thursday would likely not usher in a swift series of further cuts as the bank waits to make sure inflation is under control while easing credit to help the economy.' This statement implies that the opinions of analysts hold more weight than other sources and are therefore more trustworthy, which is not necessarily true. Additionally, there are some instances of inflammatory rhetoric used throughout the article such as 'the eurozone was hit first and hardest by the Russian cutoff' and 'inflation fell to 2.6% in May, down from a peak of 10.6% in October 2022 and within range of the ECB’s goal of 2%.' These statements are not objectively true or false, but they do convey a sense of urgency and importance that may influence readers' perceptions.
]Analysts say[/
a quarter-point cut on Thursday would likely not usher in a swift series of further cuts as the bank waits to make sure inflation is under control while easing credit to help the economy.
The Federal Reserve held the federal funds rate steady for the sixth consecutive meeting in May 2024
Joseph Camberato, CEO at NationalBusinessCapital.com believes it’s unlikely the Fed will make a rate cut just yet due to high inflation and unemployment remaining the same
Daniel McKeever, assistant professor at Binghamton University thinks the probability of a June rate cut is low and mortgage rates are likely to stay around 7% if the Fed keeps its benchmark rate unchanged
Van Hesser, chief strategist at Kroll Bond Rating Agency predicts no rate cut from the Fed and expects mortgage rates to remain in the current range with little room for significant drops in the near future
Emily Overton, capital markets analyst at Veterans United Home Loans anticipates one rate cut this year but if the Fed matches market expectations, mortgage rates should remain relatively unchanged
Accuracy
No Contradictions at Time
Of
Publication
Deception
(30%)
The article contains selective reporting as it only quotes experts who believe mortgage rates will not fall after the June Fed meeting. It does not provide any counter-arguments or perspectives from experts who hold a different view. This is deceptive because it presents a one-sided perspective on the issue.
Van Hesser, chief strategist at Kroll Bond Rating Agency: ‘No (the Fed will not cut rates).’
We consulted several experts to get their take on the Federal Reserve’s potential course and how it could influence mortgage rates. Here’s what they had to say.
Joseph Camberato, CEO at NationalBusinessCapital.com: ‘I highly doubt we’re going to get a rate cut just yet.’
Daniel McKeever, assistant professor at the School of Management at Binghamton University, State University of New York: ‘I think the probability of a June rate cut is pretty low.’
Fallacies
(85%)
The author does not make any explicit fallacious statements in the article. However, there are several instances of appeals to authority from experts quoted in the article. This is an informal fallacy but it is not a major issue as long as the expertise of the individuals being cited is relevant to the topic and their opinions are accurately represented.
][Daniel McKeever, assistant professor at the School of Management at Binghamton University, State University of New York]: 'I think the probability of a June rate cut is pretty low.'[[
'][Van Hesser, chief strategist at Kroll Bond Rating Agency]: 'No (the Fed will not cut rates).'[[
