Key Events In Developed Markets Next Week - Friday, April 7
Next week's CPI report will play a big part in whether the Fed will hike rates much further. We expect it will prefer to raise rates at least one more time, however, we also see a strong probability of rates being cut later in the year given the circumstances. For the Bank of Canada, expect rates to remain unchanged as we are likely to be at the peak.
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US: Strong probability of the Fed reversing course
Markets are increasingly doubtful that the Fed will be able to hike rates much further, but that could yet change after the upcoming CPI report. Another 0.4% month-on-month figure on core CPI, more than double the rate required over time to take the US back to the 2% year-on-year inflation rate target, could nudge expectations for the upcoming FOMC meeting higher.
We still think the Fed would prefer to raise rates at least once more should financial conditions allow, but we see a strong probability that it reverses course and cuts rates by 100bp later in the year as ever-tighter lending conditions, high borrowing costs, weak business sentiment and a deteriorating housing market all weigh on growth and rapidly dampen price pressures.
Canada: Rates to remain at 4.5%
The Bank of Canada is widely expected to leave rates unchanged next week having signalled that rates are already likely at the peak. The downside risks for global growth in the wake of recent banking turmoil only make it more likely that the next move from the central bank will be an interest rate cut.
Eurozone: February data will be key
For the eurozone, it’s an important week to get a sense of how GDP has developed over the first quarter. Industrial production and retail sales figures are both up for February, following a rise in January. They were up only moderately though and given how volatile these numbers are, February data will be key to determining whether we will see quarterly growth for the most timely consumption and production figures.
Key events in developed markets next week
(Click on image to enlarge)
Source: Refinitiv, ING
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Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any ...
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