Week in review
- U.S. Fed kept policy rate unchanged at 4.25%-4.5%
- ECB lowers policy rate by 25bps to 2.75%
- China Jan NBS manuf and non-manuf. PMI fell to 49.1 and 50.2 respectively
Week ahead
- Eurozone inflation rate
- U.S. January employment report
- India and U.K. interest rate decision
Thought of the week
Cruising on solid economic activity, steady labour market and inflation, it was widely expected that the Federal Reserve would maintain its policy rate, ending a series of three consecutive rate cuts. Although the statement's tone shifted slightly towards a more hawkish stance, the press conference leaned a bit more dovish, with Powell describing these changes as minor adjustments to "clean up" the language. Powell emphasized several times that future decisions would remain data-dependent and that the Fed is not following a predetermined path, as well as staying cautious about commenting on effects from potential changes in immigration, trade, regulatory, or tax policies. Market expectations for policy easing turned slightly more hawkish, but largely remained the same as before the meeting, pricing in close to no additional rate cuts until the summer, although the path forward will remain largely uncertain.
Federal funds rate expectations
Market expectations for the fed funds rate
Source: Bloomberg, FactSet, U.S. Federal Reserve, J.P. Morgan Asset Management. Data reflect most recently available as of 31/01/25.
Market data
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