“We expect a divergence to open up between the loosening cycles of the Fed and the ECB as mounting inflation risks cause the former to take a fairly cautious approach, while the latter responds forcefully to economic weakness,” said Jennifer McKeown, chief global economist at Capital Economics.
The trend is heading in the opposite direction in the Eurozone, where growth projections have been downgraded to 0.7 per cent this year and 1.1 per cent year. In the summer, economists expected growth of 1.4 per cent in the bloc for 2025. Some business surveys suggest that the Euro area economy could fall into recession, said McKeown at Capital Economics, “which would be a stark contrast with the resilience of the US economy”.