Previous Trading Days Events 25 Jan 2024

All eyes were on the European Central Banks ECB rate decision release yesterday. It held the 3 key interest rates steady and reaffirmed its commitment to fighting inflation, commenting that soon will be the time for cutting borrowing costs.

The ECB mentioned that it is too soon to discuss a reversal in interest rates since price pressures persist.

The consensus around the table was that it was premature to discuss rate cuts, ECB President Christine Lagarde told her regular news conference following the decision, insisting that future decisions would depend on incoming data. We need to be further along the disinflation process to be confident that inflation will be at target sustainably so.

While fighting inflation aggressively, economists worry about the economies in the Eurozone, since recent data show worsening business conditions.

Germany is in an absolute hole with no prospect of getting out of it, and yet the ECB seem more worried about inflation than they are about a depression, said Michael Hewson, chief market strategist at CMC Markets in London.

The ECB expects household and government spending to drive a recovery but data appear to be painting a bleaker picture, with manufacturing remaining in recession and services cooling.

Disruptions to trade from attacks by Yemens Houthi group on shipping in the Red Sea could add to inflation by pushing up energy and freight costs, she warned.

We are observing it very…