Headlines

ECB Ups Interest By 25 Basis Points To 4.50% As The Future Looks Bleak

BY Standard Investment Bank · September 19, 2023 08:09 am

KEY POINTS

U.K. GDP at minus 0.5% (0.5% previous, -0.2% expected), U.S. CPI 3.7% y/y (3.2% previous, 3.6% expected), ECB Interest Rate Decision at 4.50% (4.25% previous and expected), U.S. Initial Jobless Claims at 220K (217K previous, 225K expected), U.S. PPI 0.7% m/m (0.4% previous and expected).

The European Central Bank (ECB) raised its interest rates this week by 25 basis points to 4.50%. ECB President Lagarde hinted that:

(a) the central bank has hit “peak rates” and,

(b) they’ll keep their interest rates high for a long period.

Trade Smarter, Grow Faster with Kingdom Bank Trade Finance

Market participants are increasingly feeling confident about a US soft landing, noting that the US seems to be on a path to contain inflation without majorly damaging the economy as every measure of inflation is on the way down.

Both the U.S. headline and core CPI exceeded market expectations, but not enough to convince the markets that the Fed would raise its interest rates in the next meeting.

Read More:

This week in Chinese stimulus measures, the People’s Bank of China cut the Reserve Requirement Ratio (RRR) for all banks by 25 bps for the second time this year.

The reduction in RRR is expected to free up north of 500 billion yuan ($68.71 billion) for medium-to-long-term liquidity into the system, adding to its cache of stimulus measures to spur the economy.

Data highlights: U.K. GDP at minus 0.5% (0.5% previous, -0.2% expected), U.S. CPI 3.7% y/y (3.2% previous, 3.6% expected), ECB Interest Rate Decision at 4.50% (4.25% previous and expected), U.S. Initial Jobless Claims at 220K (217K previous, 225K expected), U.S. PPI 0.7% m/m (0.4% previous and expected).

Week ahead: Eurozone CPI, Canada CPI – Tuesday | U.K. CPI, FOMC Statement & Fed Interest Rate Decision – Wednesday | New Zealand GDP, Swiss National Bank Interest Rate Decision, Bank of England Interest Rate Decision, U.S. Initial Jobless Claims – Thursday | Bank of Japan Monetary Policy Decision, U.S. PMIs – Friday.