Bassanese Bites: Hawkish cut – December 16 2024
Global markets
Global equities eased back last week after three weekly gains – likely reflecting buyer exhaustion, higher bond yields, and caution ahead of the US CPI result and upcoming Fed meeting.
There were few major global market movers last week, with the US November CPI inflation report in line with expectations, albeit with core prices up 0.3% (3.3% annual) and so still suggestive of a stalling in the disinflationary process over recent months.
Also in line with market expectations, the European Central Bank and Swiss National Bank cut rates by 0.25% and 0.5% respectively – though the Swiss cut was larger than expected. With annual inflation at 0.7% and the cash rate at 0.5%, the Swiss are back to battling the pre-COVID central bank problem of overly low inflation and near-zero interest rates.
Global week ahead
The last Fed meeting of the year on Wednesday will be the key global highlight this week, with a 0.25% cut seen as a virtual certainty by the market. Of more interest will be Fed guidance and its updated set of economic and interest rate forecasts (the ‘dot plot’). Could there be a hawkish cut, accompanied by commentary that downplays the chance of future rate cuts?
