Last month, U.S. Federal Reserve Chair Jay Powell made a notable shift in monetary policy, reducing interest rates for the first time in four years by 0.5 percentage points to a target range of 4.75-5%. This move signaled a retreat from the Fed’s aggressive stance to cool the economy. Meanwhile, European Central Bank (ECB) President Christine Lagarde indicated another potential rate cut, expressing confidence that eurozone inflation will soon hit its 2% target.
However, concerns are mounting that both central banks may have acted too late. London Business School’s Professor Richard Portes criticized the Fed and ECB for being “behind the curve,” noting inflation rates have dropped across the eurozone and the U.S. is showing signs of weakening output and employment. He added that despite fiscal deficits in several countries, monetary easing is justified as inflation continues to decline
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