Dear Reader,

Today's overview of economic news and market action

• Another generally uneventful day on markets yesterday
• UK and Eurozone macro calendars were sparse
• US data releases were mixed versus expectations
• Main FX pairs were confined to tight ranges
• EUR/USD opens once again in the lower half of $1.08-1.09
• EUR/GBP continues to trade in the upper half of 85-86p
• Today’s macro data highlight is the Eurozone EC economic sentiment index (Mar)

Central banks and markets now aligned on rate cuts

Following a busy week of central bank meetings and major policy changes, policymakers and markets are now more aligned on the outlook for rates in 2024. Notably, the shift by the Bank of Japan marked a symbolic end to its negative rate and yield curve control policies.

PMI jumped to 52.2 in Feb, its highest level since June 2022. A sharp rise in output and employment, alongside growth in new orders were the key features of the survey.

World economy grew at a very modest pace in 2023. Subdued growth expected again in 2024, with continuing weak performance by Eurozone in particular. 

Inflation fell sharply last year and further moderation in price pressures anticipated in 2024.

BoE gradually moving towards cutting interest rates

The March meeting of the Bank of England’s Monetary Policy Committee (MPC) saw the central bank keep its key interest rate unchanged at 5.25%. This decision was very much in line with market expectations.

Fed primed for 75bps of cuts in 2024, starting in summer 

The US Federal Reserve Open Market Committee’s second meeting of 2024 saw its key interest rate left on hold last night. The target range for the Fed funds rate remains at 5.25-5.50%, a 22-year high.