The Riksbank joined the club of European central banks that cut rates ahead of the Fed this week. The ECB is almost certain to follow suit in June and we think it would take a very big hawkish shift by the Fed for the ECB to scale back easing beyond June. Otherwise, the new manifesto of Germany’s CDU suggests that a government led by the party would continue with fiscal policy tightening and pursue only a very slow decoupling from China.
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