Dear Reader,

Today's overview of economic news and market action:

• US market rate expectations softened in the lead up to yesterday’s Fed policy announcement …
• However, at the press conference, Chair Powell pushed back against expectations for a rate cut in March …
• Investors reduced bets of a rate cut in Q1 in response. However, 140bps of cuts are priced in for end year …
• Dollar was on the defensive during the European session but firmed overnight …
• EUR/USD opens this morning back below $1.08 …
• GBP/USD is near the midpoint of $1.26-1.27 …
• Meantime, EUR/JPY is back in the ¥158-159 range …
• Today, the focus is on the BoE …
• Eurozone flash HICP inflation (January) will also feature …

World economy grew at a very modest pace in 2023. Subdued growth expected again in 2024, with continuing weak performance by most advanced economies in particular. Inflation fell sharply last year and further moderation in price pressures anticipated in 2024.

ECB on hold for third straight meeting

The first policy setting meeting of the ECB’s Governing Council for 2024 saw the Central Bank maintain its key deposit rate at 4%.

The Lady’s Not for Turning? 

The first policy setting meeting of the ECB’s Governing Council for 2024 saw the Central Bank maintain its key deposit rate at 
4%, as expected.