Experts Bruce Kasman and Joseph Lupton discuss softer growth and inflation data, central bank cautiousness, upcoming global PMIs, US payrolls supporting consumers, and potential cutting cycles by ECB and BoC. Topics include data revisions, global macroeconomic conditions, central bank decisions, and fluctuations in economic forecasts.
Global PMIs crucial for tracking manufacturing lift into midyear.
ECB set to initiate tentative cutting cycle despite elevated inflation levels.
Deep dives
US Economy: The Current State and Predictions
The US economy has shown signs of moderation in growth with disappointments in inflation figures and weaker consumption profiles. Despite the setback, the expectation is for the US to experience moderate growth, elevated core inflation, and stability without extreme concerns on inflation or growth breaking significantly.
European Central Bank's Monetary Policy and Guidance
The ECB anticipates a 25 basis point cut in interest rates despite elevated inflation levels, particularly in comparison with the US. There are uncertainties about the pace of future rate cuts. The ECB's approach to easing has drawn both support and criticism, leading to discussions on the timing and necessity of such moves.
Global Economic Outlook: Focus on China, Asia, and Japan
China's economy is undergoing a significant downshift, raising concerns for Asian export-oriented economies. The analysis of PMIs in Asia, including China and Japan, will play an integral role in assessing economic trends. Japan's potential hike in interest rates aims to address weak consumer spending, but concerns persist about the overall economic recovery and inflation dynamics.
In a data-heavy short week, the latest news points to somewhat softer growth and inflation but none of which alter views of a resilient expansion and sticky elevated inflation that will keep central banks more cautious. Next week’s global PMIs will be important for tracking our call of a manufacturing lift into midyear, while US payrolls to show continued support for consumers and the ECB and BoC look set to begin a tentative cutting cycle.
