- We have a busy week of events and data releases to look forward to, with the main focus being Wednesday’s FOMC decision. Recent above consensus inflation releases have reined in market expectations for rate cuts from the Federal Reserve this year, and analysts put a zero percent chance of a decrease this week. The market is currently pricing in 72 basis points of cuts in 2024, which pretty much equates to three cuts of 0.25%, with the June FOMC currently pricing in a 50% chance of a 25bp reduction. The updated ‘dot plot’ will be heavily scrutinized and markets will look for any guidance from Chairman Powell on rate cut timing. Aside from the Fed meeting, we have a few data releases on the docket including Housing Starts (Tue), Jobless Claims, Philly Fed Outlook, and Existing Home Sales (Thur).
- Euro area Final CPI is released later this morning, where headline and core inflation fell slightly less than consensus had anticipated in February. Tuesday sees the release of the German ZEW Survey where investor expectations are expected to have improved for a seventh successive month. The euro-area composite PMI survey for March is out on Thursday and markets will look to see if the data provides an indication of whether GDP growth continued to gain momentum in the first quarter.
- The latest UK inflation report is out on Wednesday, with headline CPI inflation expected to drop back swiftly in February to 3.4% from 4% in January. Markets currently expect headline inflation to fall below 3% in March, with a possible sub 2% reading coming in due course. The Bank of England is expected to keep rates on hold when the MPC meets on Thursday, acknowledging that the next move in rates will likely be down however the timing of the first move remains vague. Retail Sales are released on Friday, with recent readings hampered by poor weather.
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