Summary
In the coming week, central banks are poised to make significant interest rate decisions. The U.S. Federal Reserve is anticipated to reduce its rate by 0.25%, though market expectations hint at a potential 0.5% cut. Conversely, the Bank of England is expected to maintain its rate at 5%, while the Bank of Japan and Indonesia are projected to keep their rates steady at 0.25% and 6.25%, respectively. The Turkish central bank is likely to maintain its high rate of 50%, and Brazil might lower its rate by 0.25% to 10.5%. Inflation rates are nearing targets in various regions, with the UK and Euro area seeing declines, though Japan's inflation continues to rise. Japan's trade balance has worsened, with a significant deficit due to high import growth despite a stronger Yen. Manufacturing PMIs indicate a slowdown across major economies, with contraction signs in the Euro area and the U.S., though India’s PMI remains expansionary albeit at reduced levels.
In the oil market, the Baker Hughes rig count has increased to 488, while WTI prices have dropped to an average of $67.9 per barrel. The IEA's latest report contrasts sharply with recent bullish forecasts from OPEC and the U.S. EIA, citing weak demand prospects, particularly due to China's economic challenges and structural issues in OECD countries. Despite OPEC+ cuts, as non-opec+ supply is expected to rise significantly, the IEA foreseea a potential market slackening starting in Q1 2025. The ECB recently lowered its interest rate by 0.25%, acknowledging that high previous rates will impact the economy into 2026. Future energy price movements could significantly influence inflation and economic growth, presenting a complex scenario for monetary policy adjustments.
