A full-scale Middle East conflict is unlikely but any further escalation of tensions would have significant adverse consequences for commodity markets and inflation, affirming geopolitical developments as a core economic challenge globally.
Signs that central banks in Europe may diverge from the Federal Reserve are driving the dollar to its strongest levels in months. U.S. inflation is proving difficult to quell, raising the prospect of the Fed sustaining high interest rates. The Bank of England could also start cutting this summer if inflation continues to subside in the U.K., analysts say.
The European Central Bank (ECB) has decided to hold interest rates at their current level for its fifth consecutive meeting. In a press conference, ECB President Christine Lagarde referenced the US Federal Reserve's own monetary policy, stating: "We are data-dependent, not Fed-dependent." DZ Bank Head of FX and Monetary Policy Research Sonja Marten joins Yahoo Finance to discuss the recent decision from the ECB and how it impacts global markets. In terms of the parity call and what investors should keep in mind for their portfolios, Marten states: "What's really important to understand is that as far as the FX [foreign exchange] market is concerned, this is all about relative performance. If you look, and I'm talking now really about fundamental growth, so if you look at Europe and you look at the data in recent months, been really, really poor. We have recession in Germany, things aren't looking good, but if you look at what the market is pricing in, that's already in the price and if you look at the US, the opposite almost is the case. What I'm saying is in terms of euro-dollar, while there's a lot going on right now... I don't think there's a driver here for euro-dollar to move significantly higher or lower lastingly, so we have a fairly flat forecast." For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance. This post was written by Nicholas Jacobino
As growing uncertainty unfolds around the Federal Reserve's monetary policy path, the focus shifts across the Atlantic to the European Central Bank (ECB). The ECB has decided to hold interest rates steady, with deposit rates sitting at 4% for the fifth consecutive meeting. To provide insights on this decision, Former President of the European Central Bank Jean-Claude Trichet joins Yahoo Finance. Trichet suggests that the ECB's message in holding rates steady is "pretty clear," believing the central bank is "going in a good direction" on its efforts to combat inflation and has not made any "pre-commitment" on rate cuts. He says this would have left the ECB "trapped in an overhaul of expectations" that a June rate cut would occur. However, Trichet notes that the expectation of a June rate cut is "not a done deal," as there are many factors that could shift expectations in this "very... uncertain" environment. He emphasizes that the ECB's goal is to reach a 2% inflation target by 2025 and he is "confident" that the central bank is on the right course to achieve that. Trichet also points out that while the US is also looking to move towards a 2% inflation target, Europe is closer to reaching that goal: "We are not as parallel... in the decreasing of inflation as we were perhaps before." For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance. This post was written by Angel Smith
It’s the Federal Reserve's world and we’re all just living in it. Markets failed to react when the European Central Bank held interest rates steady but signaled it could pivot to policy easing in June.
The European Central Bank held interest rates at a record high and signaled it is moving closer to rate cuts, even as the Federal Reserve’s path to monetary easing becomes less straightforward.Read the ...
Doubts about how soon the Federal Reserve may cut interest rates have investors considering an unusual scenario: The European Central Bank may beat Washington to the policy-easing punch. The ECB is set to release its latest policy decision Thursday. Bets that the Fed will wait until July have also risen.
U.S. consumer inflation is creating a worrying environment for investors. Rising housing and petrol prices worsen consumer inflation, thereby delaying key rate cuts and strengthening the dollar.
Three policy rate decisions over 48 hours will test investors’ interest rate expectations. What will central banks decide next week? Octa analysts share their opinion.
France faces important fiscal, social and political hurdles to finding additional savings in the next four years, challenging the execution of its medium-term fiscal consolidation strategy ahead of 2027 elections.
The latest plot suggests three cuts in each of this year, next year and 2026.
In order to be able to sell their bond portfolios, central banks are having to rethink the way they set interest rates. Today, the European Central Bank unveiled its approach. For many years now, rates across most developed economies have been determined by the return that central banks offer on excess money deposited in their facilities.
After quite a lot of readjustment, investors’ views about the path of rate cuts at the European Central Bank finally appear closer to the mark. The ECB [left interest rates unchanged](https://www.wsj.com/economy/central-banking/ecb-rate-decision-march-2024-9c42b49b) at its monthly meeting today, which was widely expected. The implied probability of a rate cut in December [did increase today](https://www.wsj.com/livecoverage/stock-market-today-dow-jones-03-07-2024/card/european-bonds-rally-on-lower-ecb-inflation-forecasts-9w0toZY5VVPhy41RnlzA), after the ECB downgraded its projections for growth and inflation in 2024, but pricing still suggests that rates won’t go lower than 3% this year.
Further upside for Greece’s credit rating hinges on robust nominal growth, deeper fiscal consolidation, more reform of the banks and structural reform compensating for years of public and private under-investment.
Caution evident from the Fed’s minutes against cutting rates too quickly has supported the narrative of ‘higher for longer’.
Germany’s energy-intensive industries, low investment, ageing population and weak growth, rather than high government debt, represent challenges to its AAA credit rating – hence the need to reform the debt brake.
The March rate-cut bet is slipping away in Europe as well as the U.S. A day after Federal Reserve Chair Jerome Powell indicated the U.S. central bank probably won't [cut rates in March](https://www.wsj.com/economy/central-banking/fed-leaves-rates-steady-and-opens-door-wider-to-cuts-d10a107d), a higher-than-expected inflation reading in the eurozone suggests it isn't likely there, either. + Core inflation, which excludes volatile categories like food and energy, also declined, but slower than expected. After the data, U.K. consultancy Pantheon Macroeconomics abandoned its call that the European Central Bank would cut rates in March.
The U.S. dollar edged higher in early European trade Monday, retaining support at the start of a week packed with risk events, including a Federal Reserve policy meeting and key employment data. Attention this week will squarely be on the Federal Reserve's two-day policy meeting, which concludes on Wednesday. The U.S. central bank is widely expected to keep interest rates unchanged, with investors eagerly awaiting Fed Chair Jerome Powell’s post policy meeting press conference for any indication that officials believe they have progressed enough in their battle against inflation to begin cutting rates sooner rather than later.
The FOMC meeting will take place on 30–31 January 2024, some of the key dates traders mark on their calendars. The market expected the Fed to keep rates at 5.25–5.50%, but the FOMC has signalled several rate cuts throughout 2024 as inflation weakens and the economy slows. Octa explains what
The publication of the US GDP growth rate for Q4, 2023, has shown a significant increase compared to forecasts.