Semafor Signals: Global insights on today’s biggest stories. This week will be crucial in determining whether the trend of rate cuts seen in countries like Canada and the European Central Bank will persist globally. At the beginning of the year, economists predicted rate cuts in major economies starting in March, but delays have pushed those expected cuts to later in the year. Further delays this week could indicate a widespread display of hesitancy in June.
The chance for rate cuts this summer may be slim, but economists believe they are still on the way, just later in the year. The global economy has proven resilient, with disinflation driving global inflation lower and creating a path for more accommodative monetary policies. However, challenges such as divergence in disinflation paths among major economies and high interest rates may hinder this expansion.
In the UK, Prime Minister Rishi Sunak’s decision to call an election in July instead of waiting until the fall has raised questions. While some believed he could have a greater chance of seeing a rate cut before the election, others argue that moving towards an economic recovery may not be enough for him to win given the strong anti-incumbency sentiment affecting world leaders. Additionally, a September rate cut in the UK is not guaranteed due to potential inflationary pressures caused by events like Taylor Swift’s sold-out London shows in August.