April 15, 2024

Daily Report 15/04/2024

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Predictions over the next moves by The Bank of England continues to dominate as market forecasts for interest rate cuts by the BoE have been adjusted, with the policy rate now expected to decline to around 4.75% by the end of 2024, down from the current rate of 5.25%. This marks a shift from the previous expectation of a drop to 4.5% by December. BoE’s policymaker, Megan Greene emphasised that rate cuts in the United Kingdom should still be considered distant, pointing to a greater risk of persistent inflation in the UK compared to the US.

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The ECB left rates unchanged at the 4% level in a contested decision, as some committee members were in favour of a rate cut. This, and the dovish tilt on the monetary statement has boosted expectations that the bank will start easing its monetary policy soon. Investors have marked June in their calendars. This would put the ECB on the unprecedented position of shifting its monetary policy ahead of the Federal Reserve.

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Boston Federal Reserve President Susan Collins remarked on Friday that she anticipates ‘around two’ rate cuts for 2024, while still expecting inflation pressures to diminish later this year. She emphasised the uncertainty surrounding the timing of potential rate cuts and noted that while a rate hike is not currently part of the baseline scenario, it cannot be entirely ruled out. Robust US inflation and strong macroeconomic indicators are prompting the Fed to reconsider its plans for monetary easing. The probability of interest rates remaining unchanged at the June meeting has increased to 63.5%, up from 46.8% the previous week.

Key Data 

13.30 Retail Sales (MoM) (Mar) Exp. 0.3% Prev. 0.6%
13.30 Retail Sales Control Group (Mar) Exp. 0% Prev. 0%