The ECB lowered their rates by 25bps yesterday and they are now nearing 2%, so this means that savings are barely paying anything above inflation, if we assume the inflation levels to be real, which are around 2%. This that you are losing money by keeping your capital on money market funds at this point, which incentivizes risk off assets, since investors may be forced to take on such risk if they want to make any money.

Meanwhile the FED continues to have rates above inflation, so anyone with a couple million can just chill on money market funds, deposits and so on, and get an income with no risk taking. This does not incentivize people to invest and does not incentivize people to get a mortgage to buy a house since rates are expected to fall, they just don't for now.

So why is the ECB lowering rates before the FED? It used to be that the FED lead and the rest of the world pretty much followed on it. Now the FED is lagging. Is it because they are scared of a second wave of inflation? Why else wouldn't they lower rates at this point? Assuming the economy is doing well, it wouldn't be a panic cut, it would just be lowering rates because the inflation goal is being achieved, but they aren't in a hurry yet. So what does this signal? It signals that the economy is doing good and lowering rates isn't needed? That's how I read it.