Influence of the money supply on the economy: key interest rate changes by the Fed and ECB

Influence of the money supply on the economy: key interest rate changes by the Fed and ECB

According to a report by www.tichyseinblick.de,

The article reports on the US Federal Reserve's (Fed) decision to keep interest rates unchanged, while analysts predict an imminent cut. The European Central Bank (ECB) is also lowering its interest rates. Inflation remains high in both economic areas, which has a negative impact on the real estate and construction sectors.

It is obvious that monetary policy plays a crucial role in regulating inflation and the decisions of the Fed and the ECB have a significant impact on the financial market. The reduction in the key interest rate could lead to increased lending by banks, which in turn could fuel inflation.

The persistently high inflation rate and the threat of a reduction in key interest rates can also have an impact on the real estate industry. Rising construction costs and high interest rates have already led to a lack of orders and cancellations. This could further aggravate the situation and ultimately lead to a housing crisis.

Likewise, the performance of the stock market is worrying as there is a potential housing bubble growth. The combination of optimistic market reactions and skeptical consumers suggests a disconnect between investor expectations and reality.

In summary, aside from interest rates, the real problem remains the money supply, which has tripled since the introduction of the euro. Consumers are feeling this development in their everyday lives and could have long-term effects on society and economic cohesion.

It is clear that the decisions of the Fed and the ECB have a significant impact on the financial market and current developments such as the increase in bankruptcies and the impending real estate crisis must be taken seriously.