The YoY European inflation levels decreased from 2.6% in February to 2.4% in March. This decline opens the door for discussions among members of the European Central Bank’s Governing Council regarding the potential interest rate reduction at their upcoming meeting next week. The expectation is to maintain rates at the April meeting and to implement a 25-basis point cut at the June meeting, with further reductions of up to 75 basis points throughout the year, contingent upon economic data. Investors will tune in the President of the European Central Bank’s press conference for insights into the timing and extent of expected interest rate cuts.

Meanwhile, market attention is on the interest rate decisions of the Reserve Bank of New Zealand and the Bank of Canada this week. Both central banks are expected to keep their current interest rates unchanged, but investors will closely monitor any indications of potential shifts in monetary policy during the first half of the year. The Bank of Canada may consider a 25-basis point cut at the June meeting, given the Canadian Consumer Price Index’s decline from 2.9% in January to 2.8% in February, nearing its 2% target. Conversely, New Zealand’s inflation levels from the fourth quarter of the previous year remain at 4.7%, preventing immediate considerations for interest rate cuts. Therefore, the inflation figures for the first quarter of the current year will be critical in determining the likelihood of rate reductions during the third or fourth quarter.

Additionally, investors await the release of the Federal Reserve meeting minutes, which will provide insights into members’ discussions at their previous meeting. It’s notable that a majority of Federal Reserve Committee members agree that there’s no urgency to cut interest rates, emphasizing the need for at least two months’ worth of economic data to support potential rate reductions before taking any action. Therefore, jobs and inflation reports for April and May will be pivotal in shaping the Federal Reserve’s upcoming monetary policy.

Economic Data Highlights (As per UAE time) 

Monday 8th of April

• SNB Chair’s speech

Tuesday 9th of April

• GBP- Retail Sales (Mar)
• AUD- Business Confidence (Mar)

Wednesday 10th of April

• RBNZ rate decision
• USD- Inflation rates (CPI- Mar)
• Bank of Canada rate decision
• Bank of Canada press conference
• FOMC meeting minutes

Thursday 11th of April

• CNY- Inflation rates (Mar)
• OPEC monthly report
• ECB Interest rates decision
• ECB press conference
• USD- Producer price index (Mar)
• Fed Williams speech

Friday 12th of April

• JPY- Industrial production (Feb)
• CNY- Imports and Exports (Mar)
• GBP- Industrial & Manufacturing production (Feb)
• EUR- Inflation rates (Germany – Mar)
• USD- Michigan consumer sentiment (Apr)