Jim Power: Interest rate cuts are coming, but by how much and when are pressing issues

A re-evaluation is underway of whether central banks, including the European Central Bank, will aggressively cut rates this year, writes Jim Power

A re-evaluation of whether the European Central Bank will aggressively cut rates is underway. Picture: AP

One of the key features of the world of finance in recent months was a sense of euphoria as headline inflation almost everywhere fell faster than expected, which led to the typically irrational financial markets to price in aggressive easing in interest rates this year, with the cuts thought likely to commence sooner rather than later.

This resulted in a very buoyant global stock markets in most places and a sharp decline in government borrowing costs, or bond yields.