Our Scans · (FS.1.02) Central Banking · Weekly Summary

• [New] In March, the European Central Bank revised slightly downward its assumptions for oil prices, and strongly downward for wholesale gas and electricity prices - a further sign that a reduction in interest rates could be close. Energy Connects
• [New] High inflation, energy prices and interest rates have mired the UK in economic stagnation in recent years but all three obstacles to growth have now either fallen away already or are expected to diminish in 2024. AOL
• [New] Unexpectedly persistent US inflation could trigger an upward revision to US interest rate expectations and cause a US dollar appreciation. IMF eLibrary
• [New] In recent weeks, concern over the US economy and stickier-than-expected UK inflation has caused traders to slash their bets on rate cuts from the Bank of England. CityAM
• [New] Higher borrowing costs from the Bank of England pushed lenders' net interest income to record highs last year, but their margins have narrowed into 2024 amid intense competition for mortgages and deposits, and the expectation that rate-setters will make multiple cuts in 2024. CityAM
• [New] The S&P 500 has slid in recent weeks, roughly halving its year-to-date gain to 5% as stickier-than-expected inflation erodes the prospects for the Federal Reserve to cut rates in 2024. Economic Times
• [New] As for the Bank of England, following this week's better than expected jobs data and the higher-than-forecast inflation prints, a 25 bps rate cut is fully priced in for September. investing.com
• [New] Although the Bank of Canada is expected to start cutting interest rates in 2024, possibly in June, the TD economists think the relief from lower borrowing costs will be less than hoped for if rates stay higher for longer. financialpost
• [New] Mortgage rates probably will not dramatically fall until the Federal Reserve starts cutting the federal funds rate - and the Fed does not want to make cuts until inflation is closer to its target rate of 2%. Yahoo Finance
• [New] The Bank of England has a target to keep inflation at 2% and if wages continue to grow there is a risk it could head higher. BBC News
• [New] Despite rising unemployment, regular pay growth excluding bonuses was stronger than expected at 6% in the three months to February, underlining the dilemma facing the Bank of England over when to start cutting interest rates. The Guardian
• [New] The most obvious source of concern is that investors have been assuming that the Federal Reserve will cut interest rates in 2024, which may be too optimistic with inflation continuing to rise at more than 3%, still well above the Fed's 2% target. The Atlantic
• [New] The Federal Reserve will now take longer to cut interest rates as a result of the latest data - and that other central banks could act similarly, given the importance of the US to the global economy. Sky News
• Panel 3 relates the US 10-year real term premium to the share of Treasuries outstanding, net of Federal Reserve holdings, both historical and forecasted. IMF eLibrary
• CPI inflation in the UK will fall below US CPI inflation in April and that the Bank of England may first cut interest rates from 5.25 pc in June and reduce them to 3 pc in 2025 rather than to 4 pc as investors expect. The Telegraph
• The Bank of England has held rates for five straight times and today's data will not change its cautious stance of higher for longer. investing.com
• Speculation is mounting that the Bank of England could lower rates in June, with inflation expected to fall further when CPI data are released during the week. IHS markit
• The ECB is expected to be one of the first major central banks to begin easing monetary policy, with the first rate cut expected in June. investing.com
• The Bank of England would be persuaded to keep rates higher for longer than expected in the UK, where the underlying causes of inflation remain persistent. The Guardian
• Investors are racing to buy British debt as traders ramp up bets that the Bank of England will start cutting interest rates before the US Federal Reserve. The Telegraph

Last updated: 25 April 2024