If this scenario materializes, the European central bank would stand in the middle of 2025 with rates at 3% and with its American counterpart, the federal reserve, in the range between 4.5% and 4.75%.
The Deutsche Bank asset manager, DWS, has predicted this Tuesday in a telematic conference that both the European Central Bank (ECB) and the Federal Reserve (Fed) of the United States will carry out three interest rate cuts until June 2025.
If this scenario materializes, the 'guardian of the euro' would stand in the middle of 2025 with rates at 3% and with its American counterpart in the range between 4.5% and 4.75%.
Going into detail, the firm's investment director, Fabian Becher, explained that for the eurozone they foresee a recovery in the economic cycle thanks to the rise in consumption and the end of the depression in industrial areas, which will lead to closing 2024 with a growth of 0.7% that would expand to 1.1% in 2025.
For its part, inflation will close this year at around 2.5% and will barely reduce to 2.3% in 2025, since underlying inflation will remain high due to the growth in salaries and, consequently, inflation. of the service sector.
In this sense, they have foreseen that the evolution of the ECB's monetary policy, which has worked until now, will follow a gradual path that will depend on the data that emerges.
The situation is different in the United States, since we are starting from a positive and stronger economic cycle, so GDP will end 2024 at 2% and will moderate to 1.6% next year due to the fall in excess savings that have been driving the US economy until now.
All in all, this lower economic vigor will support a drop in inflation to 2.3% by 2025, since it will close the current year at around 3%.
In any case, DWS explained during the conference that on both sides of the Atlantic monetary relaxation should not be understood as the move to an "expansive" policy, but simply to "less restrictive" financial conditions.
MARKET CONCENTRATION AND INDICES
Regarding the current market coordinates, the experts of the Xtrackers division (whose business object is exchange-traded funds or ETFs) of DWS, Lukas Anhert and Sturmius Schneider, have called to monitor the concentration of the market and the indexes in around Artificial Intelligence and the 'Magnificent Seven' of the United States.
It should be noted that more than half of the performance of the S&P 500 index is solely attributable to the 'Magnificent Seven', while, following in their footsteps, they have highlighted that 70% of the MSCI World index is dominated by US stocks. .
Consequently, they have pointed in the direction of alternative indexing to partially avoid that concentration that ends up permeating the entire market.
This formula is committed to replicating the indices with different constructions, whether preponderating thematic investment that covers an entire value chain, companies that have in common the distribution of high dividends or quality companies, among others.
"Therefore, such an index concept can lead to greater diversification compared to standard sector or market capitalization indices," they argued.
