Big central banks move to wait-and-see mode

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Big central banks move to wait-and-see mode
France Dernières Nouvelles,France Actualités
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Easing come. Easing go.

FILE PHOTO: The Federal Reserve building is pictured in Washington, DC, U.S., August 22, 2018. REUTERS/Chris Wattie/File Photo

In Europe, meanwhile, a changing of the guard at a deeply divided ECB likely means that its September rate cut will not be followed in the near future, with their focus instead being on jawboning the trading bloc’s political leaders to step up their own efforts at stimulus. The dispute, initiated by U.S. President Donald Trump, is in a state of detente as the two sides work to complete “Phase One” of a wider deal. But the erratic American president has abruptly changed stance before and may again.

The ECB has restarted a 2.6 trillion euro bond-buying program after cutting its interest rate on deposits in September. Back then investors were betting on two further rate cuts by March of next year, but have since pared their expectations as deep divisions emerged among ECB policymakers on the path ahead.

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