Fed's Rate Cut Spurs Speculation on Euro Zone Central Banks

Euro zone government bond yields remained steady after the Federal Reserve lowered its interest rate by 50 basis points. Analysts interpreted this as a sign of measured policy moves. The ECB's future rate cuts are also being scrutinized, given the Fed's influence and Europe's weak growth outlook.

In the wake of the Federal Reserve's significant interest rate cut, euro zone government bond yields remained steady on Thursday. The Fed lowered its key rate by 50 basis points to 4.75%-5.00%, exceeding analyst expectations of a 25 basis point cut. Analysts believe this signals measured policy moves for the remainder of the year.

Jussi Hiljanen, chief rates strategist at SEB, opined that Fed Chair Jerome Powell delivered a balanced message, reflected in the market's reaction. The decision suggests a methodical approach rather than an emergency measure.

The ECB's upcoming decisions are now under scrutiny, with speculation on potential accelerated rate cuts. Fabio Panetta of the ECB hinted at possible future rate reductions, while Bundesbank President Joachim Nagel emphasized the need to maintain high rates to combat price pressures. Markets are closely watching to predict the ECB's next move, possibly even in October.

(With inputs from agencies.)