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Weekly Market Preview
Friday, Dec 08, 2023
Investors are eagerly awaiting significant economic data and interest rate decisions from major central banks this week. The spotlight is on the US inflation figures for November, with expectations of a slight decline in the CPI headline YoY from 3.2% in October to 3.1% in November. The core CPI is anticipated to remain stable at 4%. Consequently, any lower-then-expected data would bolster the market belief that the Federal Reserve is moving towards cutting interest rates in the first quarter of the coming year.
Investors will be closely monitoring the US interest rate decision, with expectations of maintaining the current interest rates unchanged at 5.5%. The meeting will also reveal growth and inflation forecasts for the US Central Bank, along with the Fed dot plot, reflecting the FOMC members’ opinions on where US interest rates might be in the coming year. This stance could either align with the market’s current expectations or deviate from them.
The European Central Bank meeting is also under scrutiny, and it is highly likely that the ECB could maintain the current interest rate unchanged at 4.00%. The ECB will release its growth and inflation projections for both the short and long term. Investors will pay close attention to the press conference by ECB President Christine Lagarde to gain insights into the central bank’s monetary policy for the upcoming year, particularly regarding the timing of potential interest rate cuts. Analysts will be looking for any hints about whether most board members prefer an early start to rate cuts or if they are inclined to wait for later meetings in 2024.
Furthermore, the Bank of England’s interest rate decision is anticipated, and it is expected that the central bank would follow the lead of its European and American counterparts by maintaining UK interest rates unchanged at 5.25%. Notably, markets expect the Bank of England to delay interest rate cuts until June, influenced by the relatively higher inflation levels in the United Kingdom, reaching 4.6% in October compared to 3.2% in the US and 2.9% in the Eurozone in the same month.
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