Trump's re -election: A storm about Europe's inflation and economy!

Trump's re -election: A storm about Europe's inflation and economy!

Vienna, Österreich - The financial world faces decisive changes! Market participants expect an interest rate reduction for the deposit rate that banks receive from the central bank for excess funds that could decrease to 3 percent. Some forecasts even speak of a reduction of 0.5 percentage points. The current interest rate, to which banks borrow money, is 3.40 percent. This could have far-reaching effects on the European economy, since inflation could come under pressure through political measures under the newly elected US President Donald Trump. Holzmann, a member of the ECB council, warns: "The inflation forecast could be raised because of Trump", with a view to its announced tariffs, on imports that could burden both the prices for consumers and state budgets, such as vienna.at reported.

economic pressure from Trump's policy

The re-election of Trump could not only influence the US economy, but also bring Europe and China into a difficult situation. Trump's “America First” strategy and increased tariffs to Chinese goods could lead to an increase in inflation concerns and undermine confidence in the global markets. This was mainly the European industry, which had to deal with challenges before the elections. According to J.P. Morgan is under pressure to create fiscal incentives to counteract the economic consequences of an aggressive trade policy.

The likelihood that the US Federal Reserve will be forced to reduce interest rates could be reduced by increasing budget deficits and continuously high tariffs. A decline in consumer confidence could lead to investors doubting the need for fiscal stability, which would be extremely stressful for the markets. International competition could gain intensity, while US politics has unpredictable effects on the global economic framework. Europe and China have to act strategically in order not to get into an economic downward spiral, as the current developments show.