Dear Reader,

Here is an overview of today's economic news and market action:

• Positive mood on markets yesterday …
• Equity markets registered gains on both sides of the Atlantic …
• Bond markets remained volatile. Yields finish the day higher …
• Currency-wise, the main pairs operated in narrow ranges …
• Of the limited moves to register, the dollar was slightly softer …
• EUR/USD opens just above the $1.08 threshold …
• GBP/USD is operating in the lower half of $1.23-1.24 …
• Remarks from ECB President Lagarde and BoE Governor Bailey will feature today …

The stresses that have emerged in parts of the global banking system, and the associated volatility this has generated on financial markets are now weighing on central bank’s monetary policy decisions. The US Fed, in particular, is clearly worried about the economic implications, having mulled not increasing rates at all, at last week’s policy meeting.

Inflection Point

• The stresses that have emerged in parts of the global banking system, and the associated volatility this has generated on financial markets are weighing on central bank’s monetary policy decisions.
• Meantime, we have already seen a tightening of financial market conditions and lending standards for loans in the past year

Fed hikes by further 25bps, but rates near peak

As largely expected, the Fed announced a further 25bps hike in rates yesterday. This brings the target range for the Fed funds rate up to 4.75-5.0%.

BoE hikes by 25bps, and retains a tightening bias

The March meeting of the Bank of England’s Monetary Policy Committee (MPC) saw the central bank announce a 25bps rate hike. The voting breakdown showed that the MPC continued to be split on its rate decision. 

The March meeting of the ECB’s Governing Council saw the central bank raise rates by 50bps, which brings the key deposit rate up to 3%.