Editor in Chief: Moh. Reza Huwaida Sunday, May 26th, 2019

Interest Rates Could Stay Lower for Longer in Europe

Interest Rates Could Stay Lower  for Longer in Europe

FRANKFURT, Germany — Multiple threats stalking Europe’s economy mean the European Central Bank could keep interest rates at rock-bottom levels longer than expected, extending skimpy returns for savers — but supporting indebted companies and governments with low borrowing costs.
Speculation about a possible longer path to the first rate increases in Europe since 2011 has grown ahead of the European Central Bank’s meeting on Thursday. The renewed focus also comes after U.S. Federal Reserve chairman Jay Powell suggested the Fed might not hike its own rates as fast as expected either.
The reason for the doubts in Europe: the economic upswing has slowed and faces worrisome hurdles in the months ahead.
Those include a possible chaotic exit by Britain from the European Union without a trade deal, which could disrupt industrial supply chains and production. Another is the U.S.-China trade dispute, which could sideswipe Europe because its companies trade with both. And there’s the lingering threat of U.S. President Donald Trump imposing auto tariffs if U.S.-EU trade talks don’t reach a deal.
As a result, investors are not expecting a rate increase until mid- or late 2020, judging by money-market indicators.  (AP)