Inflation Financial News

Catherine Mann (pictured) said financial conditions had eased 'too much already' since September, in part as markets now 'soon expect' cuts.

Certain ECB officials have spent the month resisting market anticipations of interest rate reductions in the spring, emphasising the importance of waiting for first quarter wage data.

Non-food store sales volumes fell by 3.9% last month, following a 2.7% increase in November when Black Friday discounts increased sales.

Markets had fully priced in six ECB reductions at the end of last week, with the first move coming as soon as April.

Prior to this morning’s data release, some economists had brought forward predictions for Bank of England rate cuts, expecting potential easing in May or June.

Bank of India (RBI) Governor Shaktikanta Das said Tuesday, just days after the US capitalmarkets regulator approved bitcoin exchange traded funds. “They (the US Securities and Exchange Commission) are the best judge of what is good for their country, so they have done it. I would not like to comment on what another regulator in another country has done,” Das said at the World Economic Forum at Davos. “So far as India is concerned, we see a lot of risks and it is not necessary for us that what somebody else does, we simply adopt.” Last week, the US SEC approved ETFs based on bitcoin, a move that sent cryptocurrency prices soaring worldwide. Das has steadfastly maintained over the years that cryptocurrencies pose a palpable threat to currency and monetary stability and could be the source of the next major global financial crisis.

markets from Ankur Banerjee After the fake post comes the real thing. The long-mooted and eagerly anticipated exchange traded funds (ETFs) to track bitcoin got the official go-ahead at last, sending the crypto world into a celebratory mood at what it sees as a game-changer. The 11 applications, including from BlackRock, Ark Investments/21Shares, Fidelity and Invesco, were approved by the U.S. Securities and Exchange Commission, with most of the products expected to start trading on Thursday. Estimates of first-year inflows vary widely, from $5 billion to $100 billion. These ETFs grant wider access but whether the famously volatile cryptocurrency is accepted by a bigger investor base remains to be seen.

Markets are still predicting the first cut to come from the Fed at its 20 March meeting, with a 61.9% probability, according to the CME FedWatch Tool.

'I do not think the Bank will be able [to lower rates] because I do not think inflation will come down much further or much faster. I think we are stuck with a fairly sticky inflation situation,' she said.

Core inflation dropped from 3.6% to 3.4%, while food inflation also continued to fall, with the increase in prices largely driven by energy base effects in Germany.

Firms expected their output price inflation to fall in the next 12 months by 1.5 percentage points from the 4.4% reported for Q4 2023.

In the minutes from the Federal Open Market Committee last month, the central bank dampened market hope by forecasting only three 25bps cuts throughout the year, while futures markets predict six.

Food specific inflation was 2.2% of the total figure and decreased to 6.7% year-on-year, down from 7.8% in November.

Chancellor of the Exchequer Jeremy Hunt has spurred optimism that the Bank of England could begin interest rate cuts next year, if the government delivers its economic policies.: Simon Dawson / No 10 Downing Street

The fall defied expectations, as economists had forecast inflation to decrease to 4.4% for the month, from 4.6% in October 2023.

Inflation fell in twenty-one EU member states, remained stable in three and rose in three.

Sarah Breeden (pictured), the Bank of England's new deputy governor for financial stability.

The results come against the backdrop of flatlining economic growth, interest rates at a 15-year high and inflation above 4% in October.

The central bank's Monetary Policy Committee voted to hold interest rates at 5.25%.

Jerome Powell (pictured), chair of the US Federal Reserve

The ECB’s pause follows the decisions of the US Federal Reserve and Bank of England to also hold rates steady as inflation eases.