Week Ahead: ECB Rate Cut Might Get Eclipsed by BoC Surprise and NFP Report
XM Group | May 31, 2024 08:58AM ET
- ECB set to slash rates on Thursday, focus on forward guidance
- But will the BoC take the lead when it meets on Wednesday?
- US jobs report eyed on Friday as Fed unyielding on cuts
- OPEC+ might extend some output reductions into 2025
ECB poised to cut rates, but what’s next?
The path by central banks to lower borrowing costs has been far from smooth, but it seems that the European Central Bank will be among the first to reach its desired destination. The ECB meets on Thursday for its June policy decision and is widely expected to cut its three main lending rates by 25 basis points. This would take the deposit rate down to 3.75%, widening the differential with the Fed funds rate, which currently stands at a range of 5.25%-5.50%.
Oil prices haven’t been impressed by the rumours but an agreement that takes the cuts into next year would be positive for the outlook.
Elsewhere, the Australian dollar will be on standby for the latest domestic GDP readings on Wednesday. Australia’s economy has been steadily losing steam over the past few quarters and it’s expected that GDP growth held at a meagre 0.2% q/q in Q1.
Chinese data will also be important for the aussie next week. The Caixin manufacturing and services PMIs will be watched on Monday and Wednesday, respectively, while on Friday, investors will be hoping to see stronger exports growth when May trade stats are released.
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