Dear Reader,

Today's overview of economic news and market action

• US macro news in focus yesterday
• PPI inflation (Feb) printed higher than expected
• Retail sales (Feb) missed to the downside of forecasts
• Against this backdrop, there was a cautious tone to risk appetite
• Bond yields rose, with US Treasuries leading the way
• This provided some support to the dollar
• EUR/USD back below $1.09
• Today’s diary remains US centric with a busy schedule of releases

The March meeting of the ECB’s Governing Council saw the central bank maintain its key deposit rate at 4%. This outcome was in line with expectations.

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.

Summer interest cut signalled by European Central Bank

After around two years of aggressive interest rate hikes from the main central banks, monetary policy makers are still on hold and currently deploying a “data-dependent” approach in setting monetary policy. Overall, central banks are waiting for further signs that underlying inflation is on a sustained downward trajectory to give them confidence that it will fall back towards 2% before they will 
contemplate cutting rates. 

Cautious Approach by Central Banks

After around two years of aggressive interest rate hikes from the main central banks, monetary policy makers are currently on hold.