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LGT Navigator: US Midterm elections cast their shadow ahead

September 12, 2018

The mid-term elections in the USA on November 6 seem to be casting their shadow ahead. For example, the ruling Republicans are offering further tax breaks, and presented three legislative proposals to the House of Representatives. Among other things, personal income tax rates are to remain permanently at the level lowered last December. There could also be resistance from the Republican ranks, as further tax cuts would further widen the budget deficit.

The ECB's cautious bias toward an interest rate turnaround, despite the announcement to end its billion-dollar bond purchase program probably at the end of this year, weakened the euro significantly. The ECB maintained its key interest rate at a record low and remained extremely cautious in its communication. At the same time, the Bank of Japan also left its key interest rates unchanged and even lowered its inflation expectations.

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