The ECB has kept interest rates at record highs, slashing inflation forecasts
5 minutes ago
The European Central Bank kept interest rates unchanged on Thursday, even as it cut its inflation forecasts.
Like the Federal Reserve, which signaled no rush to raise interest rates, the ECB kept rates unchanged until inflation reached its 2% target—signaling that wages were hot.
„While most measures of core inflation have eased further, domestic price pressures remain high, in part due to strong growth in wages,” the ECB said in a statement, citing „constrained financial conditions” and the need for and bringing past rate hikes. Inflation came down.
The ECB said on Thursday it would keep its key deposit rate at 4%, adding that future rate decisions would be made „in light of incoming economic and financial data”.
It said it had revised its forecast for 2024 to reflect a lower contribution from energy prices. It expects inflation to be 2.3% this year, down from its previous forecast of 2.7%. Inflation is forecast to average 2.0% in 2025 and 1.9% in 2026.
Europe's economy was hit particularly hard by Russia's invasion of Ukraine last year and higher energy prices as interest rates rose, while the United States grew faster than economists had expected.
The ECB today cut its growth forecast for the eurozone to 0.6% for the year from its previous estimate of 0.8%, expecting economic activity to remain „modest in the near term”.
Growth will pick up to 1.5% in 2025 and 1.6% in 2026, the central bank forecast, „supported initially by consumption and later by investment.”
– Nisha Gopalan
Jobless claims met expectations, even coming in last week
31 minutes ago
Economists hit the mark with their forecasts for initial jobless claims in January.
The Labor Department reported that 217,000 workers applied for unemployment insurance in the week ending March 2. The report showed the number of initial claims unchanged this week, after adjusting last week's data slightly higher. The four-week moving average, which helps show a larger trend in initial jobless claims, fell to 212,250 from last week.
The weekly jobless claims came after yesterday's private sector jobs report showed job creation and wages advanced in February. Tomorrow, the Bureau of Labor Statistics will release the government's monthly payrolls report for February, where economists will get more information on wages and unemployment, the Federal Reserve's key indicators that track inflation.
— Terry Lane
The trade deficit is widening again
38 minutes ago
The U.S. imported $67.4 billion more in goods and services than it exported in January, as the trade deficit widened by $3.3 billion from December.
The trade deficit widened for the fourth time in five months as deficits widened with Japan, Taiwan, Vietnam, Canada and other trading partners.
The US imported more cars, computers and semiconductors, while cutting back on oil and cell phones. On the other side of the equation, it shipped more cars while reducing oil exports.