Two French chief economists believe the Federal Reserve must raise interest rates again this year, even with recent data showing labor market softening. This diverges sharply from expectations for the European Central Bank, which analysts suggest may have concluded its tightening cycle.

Analysts from Allianz and BNP Paribas, speaking at an economic forum in Aix-en-Provence, cited persistent inflation pressures in the U.S. as the driving force behind the Fed’s continued hawkish stance. In contrast, the ECB appears comfortable with its current scenario and sees less urgency to tighten policy.

This divergence signals different economic trajectories for the two major economic blocs. While the ECB may be nearing a pause, the Fed faces ongoing challenges in taming inflation, suggesting continued market volatility and a need for investors to monitor Fed communications closely.

The contrasting outlooks underscore the complex global economic environment and the differing inflation battles being waged on either side of the Atlantic.