Dear Reader,

Today's overview of economic news and market action

• Yesterday was a relatively calm day on markets, amid a limited macro calendar …
• Currency-wise, the dollar was on the defensive for most of yesterday’s European session … but
• However, the greenback recouped its losses overnight …
• This sees EUR/USD start today in the top half of $1.03-1.04 …
• GBP/USD remains between $1.24-1.25 …
• EUR/GBP is in the lower half of the 83-84p range …
• Today, the focus will be on the BoE, who are expected to cut rates by 25bps …

All rates quoted are indicative market rates.

2025 commenced on a solid note, with the Irish manufacturing sector recording an improvement in operating conditions for the first time in three months. Fresh expansions were noted for both new orders and output. More positively, confidence for the year ahead outlook remained strongly optimistic, with many businesses planning to expand capacity.

ECB cuts again, with another cut on the cards for March

The first ECB Governing Council policy setting meeting of 2025 saw the central bank cut interest rates. It reduced them by 25bps, with the Deposit rate lowered to 2.75%, while the Re-fi rate was decreased to 2.90%. This marked the fifth 25bps rate cut since the ECB commenced its easing cycle in June of last year. Today’s decision by the ECB to cut rates was unanimous. 

Fed in no hurry to cut rates

The first meeting of the US Federal Reserve Open Market Committee (FOMC) for 2025 saw the central bank leave policy on hold. The target range for the Fed funds rate was maintained at 4.25-4.50%. The decision by the FOMC to leave rates unchanged was unanimous and very much in line with market expectations. This was the first time in four meetings that the Fed did not cut interest rates, having previously reduced rates by 100bps over the course of its last three meetings in 2024.