Transatlantic interest rate rift widens as Trump piles pressure on Powell

The gap between US and Eurozone borrowing costs has reached its widest since before the Covid-19 pandemic, exceeding 225 basis points after the European Central Bank (ECB) cut rates to 2%. As the Federal Reserve is expected to maintain its rates while the ECB may implement further cuts, the divergence is likely to increase, prompting criticism from Donald Trump towards Fed chair Jay Powell. Market expectations suggest that the interest rate gap could widen to over 250 basis points later this year, especially if trade tensions escalate and the ECB continues to lower rates.

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