The US Federal Reserve is expected to cut interest rates again this week.
It comes as investors are monitoring the effects of the US government shutdown, the second longest shutdown in history, and earnings results from tech giants Apple, Microsoft, Meta, Amazon and Alphabet.
All expectations at the moment are that we will get that 25 basis point cut announced tomorrow by the Federal Reserve, according to Deloitte Ireland Chief Economist Kate English.
"Crucially, we did get inflation data released last Friday, this had been delayed a number of weeks because of that government shutdown, but it was in line with potentially what some people had expected, inflation had increased but not substantially, just above that 3% mark," she commented.
The Federal Reserve have not received government data on the labour market since its last meeting because of that government shutdown.
In its absence, they now look to private sector sources and their own anecdotal information.
"There's nothing to suggest that the slowdown in labour market or employment growth within the US has changed since their previous meeting," exlained Ms English
"Of course nothing is 100% but we are still expecting that rate cut and potentially another 25 basis points before the end of the year as well," she said.
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The European Central Bank is also meeting this week and due to announce its rate decision on Thursday.
After eight rate cuts since mid-2024, the ECB is widely expected to hold interest rates steady at 2% for a third consecutive meeting.
Euro zone inflation rose to 2.2% in September, above target for the first time since April, as services prices rose and energy cost declines slowed.
That was in line with expectations. The ECB sees inflation dropping to 1.7% next year and staying below target through mid-2027.
Ms English says growth within the euro zone is looking a little bit more positive than what it was last year and at the start of this year.
"It's now expected to grow over 1% in 2025, which isn't amazing, but it's still up from where we were previously," she said.
"And we did get PMI data released last week that showED quite strong growth within the services industry and in particular a little bit of a bright spot within Germany, which is the first one we've seen for quite some time," she added.
She also said expectations remain that we will not see any further rate cuts from the ECB as inflation continues to be hovering towards its 2% target.
"The risks at the moment for inflation within the EU are two-sided; one, if we begin to see that stronger economic growth come through and a stronger European consumer, does that push up prices naturally through more spending?".
"On the flip side of it, if we see that continuation of a strong euro versus the dollar and that further reduction in energy costs, does it bring inflation down," said Ms English.
