Improving European economy outlook

‘The low growth outlook for Europe will improve as soon as the ECB cuts interest rates. Inflation in Europe has fallen more sharply than in the US; this means that the conditions for a rate cut in Europe are more favourable. The Europeans should – for the first time – cut rates before the Americans. However, this independence is rather unlikely.’

The outlook for the European economy this year is likely to be largely determined by one factor: The low growth forecast for Europe will improve as soon as the European Central Bank (ECB) cuts interest rates. In fact, inflation in Europe has fallen more sharply than in the USA. The core rate there is still at 3.8% (up 0.4% on the previous month, which was higher than expected). This means that the conditions for an interest rate cut in Europe are more favourable than in the USA. In fact, the Europeans should – for the first time – cut interest rates before the Americans. However, that much independence is rather unlikely.

JPMorgan European Discovery Trust plc (LON:JEDT) is an investment trust company. The Investment Trust JEDT objective is to achieve capital growth from a portfolio of quoted smaller companies in Europe, excluding the United Kingdom.

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