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With the development of 2024,Facing a complex situation composed of political changes and economic challenges.Key events include parliamentary and presidential elections in many countries in the euro zone, while challenges include global conflict, fiscal tightening and inflation concerns.
After two years of depreciation, the euro rebounded in 2023 and appreciated 3%against the US dollar.With this single currency entering 2024, it faces a situation full of economic and political events, and challenges that may shape their development trajectory in the next few months.
Dynamics in political elections and changes
2024 is the year of comprehensive political incident in the euro zone.Austria, Belgium, Croatia, Lithuania, Portugal and Slovakia are preparing for important parliamentary or presidential elections.
However, all eyes are concentrated in the upcoming European Parliament elections and will be held from June 6th to 9th, 2024.The 705 members of the European Parliament are also expected to trigger the highest level of the European Commission and the highest level of the European Council, which may bring new policy initiatives that affect the euro.
Challenge ahead: from global conflict to fiscal tightening
The front road of the euro zone is full of continuous international conflict challenges, especially in Ukraine and Israel-Gasha.In Europe, the group must also respond to economic difficulties, especially the issue of EU budget and necessary green transition.
In 2024, the fiscal policy of member states is expected to become tighter.The European Commission's expected energy support measures will decrease, which will have a significant impact on the financial position.
The "debt brakes" problem of Germany is about to be crucial, especially after the German Constitutional Court announced in November 2023 that a part of the funds plan used by the government for climate and energy projects caused a part of the country's public financesEssence
There are differences among economists.According to a recent survey, some people advocate reform or abolition of debt brakes to better promote green investment, and nearly half of people support it to ensure that it is stable.
Economic and Policy Outlook: Slowing inflation and interest rate cuts are looking at
In terms of economy, due to the promotion of the service industry, after the strong recovery after the epidemic, the growth momentum slowed down due to the rise in living costs, weak external demand, and tightening monetary policy.It is expected that inflation will continue to decline, although the speed of slowing price pressure may slow down.
Regarding monetary policy, the European Central Bank maintained its key interest rate in December, indicating that its tightening cycle may end.
However, unlike the Fed Chairman Powell, the European Central Bank President Lagarde emphasized the need to be vigilant and believes that it is not time to "relax" on interest rates.
The market is expected to cut interest rates at about 7 times at about 7 times in 2024.
Outlook: Different views of major banks
ING GroupThe view of the euro is expected to reduce interest rate cuts due to the slowdown of the US economy.Euro against the US dollarIt will rise to 1.15.However, it acknowledges that the weak growth of the euro zone may lead to the European Central Bank followed the Federal Reserve to reduce interest rates and restrict the appreciation of the euro.
Bank of AmericapredictEuro against the US dollarIt will reach 1.15 by the end of 2024.Although the euro zone is expected to grow weak, the currency is expected to strengthen due to the Federal Reserve's interest rate cut.It estimatesEuro against the US dollarThe exchange rate was underestimated by about 15%.
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