After soft U.S. CPI, is Fed rate cut wishful thinking?
Fact: Federal Reserve chair Jay Powell indicated that officials are in no rush to cut borrowing costs.
economic forecasts
Will markets keep up gains this year?
The CEO of a financial advisory and fintech firm predicts that the US and European stock market rallies will continue despite the US central bank potentially not cutting rates until 2025. The expectation is based on strong earnings growth, especially in AI-focused companies, and positive economic forecasts from institutions like the IMF and Bloomberg. Additionally, signs of economic rebound in China and Europe are contributing to the optimistic outlook. The anticipation of interest rate cuts in response to a potential economic slowdown is also seen as a factor that could bolster equities. Savvy investors are advised to adopt strategic approaches to capitalize on the upward momentum while managing potential risks. April’s US consumer price index report is awaited, with traders hoping for no return to rate hikes by the Federal Reserve. Both narratives point to a likely continuation of stock market gains, with investors advised to top up their portfolios judiciously with guidance from financial advisors.
New Trump Tax Cuts Could Cost $4.6 Trillion, Bipartisan Watchdog Agency Says
The cost of extending the 2017 tax cuts for households, small businesses, and wealthy individuals enacted under President Donald Trump has expanded to .6 trillion, according to new estimates from Congress’ fiscal scorekeeper.
Euro-Dollar weakens ahead of Fed, Lagarde cites lower inflation
The EURUSD pair declined to the lower 1.0800s after European Central Bank (ECB) speakers, including President Christine Lagarde and Bank of Ireland Governor Gabriel Makhlouf, cited lower inflation. Lagarde mentioned a decrease in wage inflation and stated that the ECB is closely monitoring this before deciding on future policy moves. Lower inflation could lead to the ECB cutting interest rates, negatively affecting the Euro and the EURUSD pair. Lagarde noted that average wage growth for 2024 fell from 4.4% to 4.2% between the ECB’s January and March meetings. She mentioned the need for more evidence of receding inflation but suggested that rate hikes could be dialed back in June if data aligns with current expectations. The ECB is divided into two camps regarding the timing of interest rate decisions. ECB Vice President Luis de Guindos, preferring to wait until the June meeting, highlighted that services inflation remains too high. The Federal Reserve is expected to complete its March policy meeting without changing interest rates but may revise its quarterly forecasts and statement, potentially affecting the US Dollar valuation. Speculation exists that the Fed might adjust its economic forecasts in the Summary of Economic Projections (SEP) and the “dot plot,” possibly revising down the forecasted rate cuts in 2024 due to persistent inflationary pressures.