UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'Powell's policy problem'
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Jun 5, 2025 In a world of economic uncertainty, all surveyed economists anticipate a rate cut from the European Central Bank, raising questions about their accuracy. The discussion also contrasts the ECB's decision with the challenges faced by the US Federal Reserve. Additionally, insights into productivity trends reveal how unreliable GDP data shapes market decisions, while societal tensions linked to technology highlight the impact of prejudice politics on economic growth.
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ECB Rate Cut Consensus
- All 52 economists surveyed expect the ECB to cut rates by a quarter point today.
- Failing to cut rates would mean tightening real rates, harming the economy at this stage.
Fed Faces Policy Uncertainty
- The Fed faces uncertainty due to Trump's policy swings, unlike the ECB.
- The Fed risks acting too late because monetary policy impacts lag and data are unreliable short-term.
Tech Boosts Productivity but Faces Backlash
- Technological change enhances productivity by enabling more output with less input.
- However, social fears and backlash against change can undermine these productivity gains.