More than half of Americans are invested in the economy—directly, through life insurance, or pensions. In eurozone countries, this percentage is between 10 and 20%, says macroeconomist Edin Mujagic, who referenced the now-famous report by former ECB chief Mario Draghi. 'One of his recommendations is to mobilize European capital, which certainly exists, by encouraging Europeans to invest more.'
Currently, this seems like wishful thinking: if Draghi has his way, Europeans will simply start resembling Americans more, and investing will become significantly more popular at the expense of the traditional savings culture. 'In the Netherlands alone, we currently have around €500 billion sitting in savings accounts. That’s money not actively contributing to our shared goal of a stronger eurozone economy,' Mujagic adds.
Economists expect the ECB to cut interest rates further this year than initially anticipated. Bloomberg reports that economists foresee two more rate cuts this year, bringing the deposit rate down to 1.75% by year-end. Earlier projections had estimated a 2% rate by December. However, further cuts beyond this year are not expected. In fact, economists predict rates will rise again, reaching 2% by early 2027.
Fed Chair Jerome Powell warns that U.S. interest rates will not return to near-zero levels anytime soon, citing changing economic conditions. He also hints at potential economic turbulence ahead, with 'more frequent and persistent supply shocks.'