A big disconnect between financial markets and central banks has just got deeper, with traders ramping up their bets on interest rate cuts in the United States and Europe as evidence grows that inflationary pressures are fast abating.
Money markets are now pricing in over 100 basis points (bps) apiece of rate cuts from the US Federal Reserve (Fed) and European Central Bank (ECB) next year, and have this week shifted the expected timing of their first moves firmly forward into the first half of 2024.
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