ECB and Emerging Markets Face Pressure for Deeper Rate Cuts

In light of deteriorating global economic conditions, Fitch Ratings has announced its expectation for significantly deeper interest rate cuts by the European Central Bank (ECB) and central banks in emerging markets. This adjustment reflects the growing concerns over the global economic outlook.

Trade War Escalation Impacts Global Growth Forecast

The revision by Fitch comes as the trade war between the US and China escalates, leading to sharp tariff hikes. These developments have prompted Fitch to reduce its 2025 world growth forecast by 0.4%, marking the lowest growth rate since 2009, excluding the pandemic period. The US effective tariff rates have now reached their highest levels since 1909, further straining global trade relations.

Expectations Shift for Monetary Policy

"We now expect deeper rate cuts from the ECB and in emerging markets," Fitch stated in its report. This shift in monetary policy expectations underscores the challenges faced by central banks in stimulating economic growth amidst rising trade tensions and slowing global demand.