the Fed maintains its high rates in the United States, but the ECB could lower them in Europe as early as June

For the American Federal Reserve, it is not yet time to lower interest rates, which are peaking at levels never reached in more than 20 years: between 5.25% and 5.5%. After its last meeting, Wednesday May 1, it explains that inflation is not falling enough, and not as quickly as expected. The consumer price index is even rising a little on the other side of the Atlantic. With inflation between 2.7% and 3% in the United States, the “Fed” estimates that the objective of controlling it to 2% has not yet been achieved. We must therefore continue to cool the economic engine by leaving interest rates at a sufficient level to slow down the circulation of money.

Positive outlook in Europe

Does this mean that interest rates will also remain high in Europe, and therefore penalize households who want to invest in their homes, for example? Normally no, for two reasons. First, unlike the United States, inflation in Europe is better controlled. We are getting closer to this famous ideal level of 2%, desired by the monetary authorities. The sharp drop in energy prices is the main explanation. Next, the European Central Bank wants to mark its independence from the American Federal Reserve. The governor of the Bank of France, François Villeroy de Galhau, recently affirmed that the situation in Europe allowed the ECB to act on its own monetary policy without waiting for decisions from the Fed in the United States.

We can therefore hope for a rate cut in Europe fairly quickly. If everything goes according to plan, a reduction in interest rates here could – should – occur in June. The alignment of the planets is almost perfect to consider such a solution. Concretely, for those who have an investment project or wish to renegotiate downwards the cost of repaying a current loan, now is the time to test their banker.