, Columnist
The Sick Man of Europe Is… Europe
The European Union faces a precarious situation likely to push the ECB to follow whatever lead the Fed sets.
European Central Bank headquarters in Frankfurt, Germany.
Photographer: Alex Kraus/BloombergThis article is for subscribers only.
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Europe’s saga has taken a new turn. At its last meeting, the European Central Bank seemed in no hurry to cut rates further. Now expectation has shifted to virtual certainty that a rate cut is coming. Indeed, market participants expect the ECB to cut rates in almost perfect synchronization with the Federal Reserve. This is the future as foretold by the Bloomberg World Interest Rate Probabilities function, derived from overnight index swaps and fed funds futures: