The head of the Bank of England indicated that interest rate cuts are imminent, following a decision to maintain rates at 5.25%, their highest level in 16 years. Governor Andrew Bailey emphasized the need for further inflation reduction, but deemed last month's decrease to 3.4% as "very encouraging." He suggested rate cuts might occur before inflation reaches its 2% target.
Rishi Sunak expressed optimism about the economy's resurgence this year, noting a significant drop in inflation. He believes the country has turned a corner despite recent upheavals. Jeremy Hunt echoed this sentiment, highlighting the UK's stronger growth compared to other major European economies since 2010 under the Conservative government.
In Europe, inflation has significantly decreased from its previous double-digit levels, leading to economic stagnation. However, the European Central Bank decided to maintain its record-high interest rate, with its leader hinting at a potential rate cut in June.
The Economic and Social Research Institute (ESRI) forecasts solid growth in Ireland's domestic economy over the next two years, driven by falling inflation and increasing wages. They anticipate modified domestic demand (MDD) to rise by 2.3% this year and 2.5% next year, excluding the influence of multinational companies on Ireland's economy.
Chinese President Xi Jinping held discussions with American business leaders and scholars in Beijing, aiming to attract foreign investment back to China amid recent economic challenges. The meeting seeks to strengthen ties with US companies amidst tensions with Washington and reassure them of China's openness to investment.
Despite the creation of more jobs than expected, the unemployment rate in the US rose to its highest level in two years, reaching 3.9% last month. However, analysts believe there is little cause for major concern or fear of adverse effects from higher interest rates on the economy.
S&P Global Ratings projected a 2.5% average growth for the US economy in 2024, supported by a stable labor market. However, they cautioned that the forecast may be overly optimistic, noting a gradual slowdown to 1.8% by the fourth quarter of 2024 following a strong performance in the previous year.
Over the past month, Markets have stayed within the shortest range that we have seen for a few years. GBPEUR has seen a very short range of 1% (1.1620 - 1.1747) since mid January 2023, and now resides at 1.1656.
GBPUSD has seen a 2% range since Mid December (1.2620 - 1.2850) and currently resides at the range low 1.2630.
EURUSD has seen a 2% range since mid November (1.0720 - 1.0950) and currently resides at 1.0830
