Week Ahead: Fed to Cut, but Should It? BOJ and BOE to Stand Pat, but Should They? (December 14, 2024)

Week Ahead: Fed to Cut, but Should It? BOJ and BOE to Stand Pat, but Should They? (December 14, 2024)
Monetary Easing Continues Globally:
SNB and Bank of Canada cut rates by 50bps.
ECB reduced rates by 25bps, with more easing expected in 2025.
RBA holds rates steady; strong employment data reduces chances of a cut in Q1 2025.
Fed likely to cut rates at the FOMC meeting on December 18, but may signal fewer cuts in 2025 due to a stronger economy.
U.S. Economic Outlook:
U.S. economy stronger than expected, with 3.3% Q4 growth forecast.
Headline CPI rose for the second consecutive month, with expectations for the PCE deflator to rise.
Retail sales and industrial production to show solid growth.
Market anticipates 75bps in cuts for 2025, but Fed may be more cautious with fewer cuts.
Japan’s Economic and Monetary Policy:
Japan’s economy is stabilizing, with growth expected around 1%.
BOJ unlikely to hike rates at its December 19 meeting, despite rising inflation.
UK Economic Challenges:
UK economy contracted in October, raising concerns.
BOE likely to keep rates steady on December 19, despite calls for up to 100bps of cuts next year.
Sweden and Norway’s Central Banks:
Sweden likely to cut rates by 25bps on December 19 due to weak economy and lower inflation.
Norway’s Norges Bank expected to hold rates steady, despite higher-than-expected inflation.
Eurozone and Global Politics:
Euro struggling against the dollar, facing political tensions in France and Germany.
ECB rate cut behind, but the political landscape remains tense in Europe.
China’s Economic Outlook:
Chinese economy showing signs of recovery, but more monetary support expected.
PBOC keeps dollar's reference rate below market rates to limit yuan depreciation.
Canada and Mexico:
Canada’s strong job growth didn’t deter the Bank of Canada from its rate cut.
Mexico’s central bank likely to cut rates by 25bps on December 19 as inflation trends lower.
Latin American Currencies Strengthening:
Colombian peso outperforms, while the Brazilian real and Mexican peso show resilience against the dollar.