ECB Rate Decision Today; Powell and Macklem Say It Is Still Too Early to Cut Interest Rates

ECB Rate Decision Today; Powell and Macklem Say It Is Still Too Early to Cut Interest Rates

The European Central Bank (ECB) issues an interest rate decision today and Federal Reserve Chair Jerome Powell testifies before the Senate Banking Committee, following up on testimony Wednesday before the House Financial Services Committee.

Powell told House lawmakers the Fed is in no rush to lower interest rates because central bank officials want more evidence inflation is slowing toward their 2% target. "We're not looking for better inflation readings than we've had. We're just looking for more of them," he said. Elsewhere on Wednesday, the Bank of Canada held its main interest rate steady, as widely expected. Bank of Canada Gov. Tiff Macklem said "It's still too early to consider lowering the policy interest rate," adding that senior officials believe headline inflation will remain close to the 3% level until midyear.

The ECB is expected to keep its main interest rate unchanged at its record low of 0%. The ECB could also signal a delay in any rate hike, which markets do not currently expect until 2025. In the US on Wednesday, the Beige Book survey found the economy accelerated slightly in early 2024, in line with comments by Powell. Senior Chinese officials disclosed a double-digit percentage jump in exports in the first two months of the year while signaling further monetary easing was likely required to inject fresh life into China's downtrodden economy.

Total borrowing by governments in rich countries is set to hit a record high of €15.8 trillion this year, with the cost of making interest payments rising over coming years as bonds issued before the inflation surge mature. Senior Chinese officials disclosed a double-digit percentage jump in exports in the first two months of the year while signaling further monetary easing was likely required to inject fresh life into China's downtrodden economy.

Indonesia's central bank announced a surprise hike in its benchmark interest rate, citing concerns about inflation and a weaker rupiah. The hike came after the bank had indicated it was done with increases. Indian officials are expected to announce a rate cut of 25 basis points, their second in two months, to bolster economic growth that slumped to a 60-year low last year.

The U.K. government Wednesday announced cuts in income taxes that it hopes will help revive a stagnant economy, but its budget watchdog forecast an anemic return to growth ahead of an election that is due by early next year. The measures announced "do not change the economic outlook or the [BOE] monetary policy committee's thinking very much," according to Pantheon Macroeconomics' UK economist.

The Securities and Exchange Commission approved new requirements that public companies disclose their greenhouse-gas emissions, but dropped a key provision that was fiercely opposed by business groups. New York Community Bancorp is raising more than $1 billion from a group of investors including former Treasury Secretary Steven Mnuchin, in a bid to shore up confidence in the troubled regional lender.

Bitcoin bulls cite a simple reason for its rally: not enough coins. Fans of the world's largest cryptocurrency say it is due to old-fashioned laws of supply and demand. Forward Guidance Thursday (all times ET) 8:15 a.m.: ECB interest rate decision 8:30 a.m.: U.S. weekly jobless claims; U.S. productivity and costs, fourth quarter 2023; U.S. trade report for January; Canada trade report for January 8:45 a.m.: ECB interest rate decision press conference 10 a.m.: Fed's Powell presents Semiannual Monetary Policy Report to Congress to Senate Banking Committee; ECB Lagarde's podcast on latest monetary policy decisions 11:30 a.m.: Cleveland Fed's Mester speaks at European Economics and Financial Centre's Distinguished Speaker Series 3 p.m.: U.S. consumer credit 4:30 p.m.: Fed balance sheet Friday 7 a.m.: New York Fed's Williams in moderated discussion at London School of Economics 8:30 a.m.: U.S. employment report for February; Canada labor force report for February