Rate Cuts Are Already Here For One G-7 Economy (2024)

Rate Cuts Are Already Here For One G-7 Economy By Hardika Singh

Bank of Canada officials signaled more rate cuts are possible as inflation cools. Meanwhile, a booming economy and rising household wealth help some consumers keep spending. And an SEC rule that would have required funds to better disclose fees they charge was struck down by a federal court in New Orleans. Read on for this news and more.

Top News Bank of Canada Cuts Rates to Become First G-7 Central Bank to Ease Policy

The Bank of Canada cut its main interest rate by a quarter percentage point, becoming the first Group of Seven central bank to provide rate relief after global policymakers aggressively increased borrowing costs to tame inflation.

Hannon's Take: U.S. Government Debt Is A Growing Concern By Paul Hannon

The changing outlook for the Federal Reserve's key interest rate has been a preoccupation for many policymakers around the world this year. But another concern about the U.S. economy is on the rise - the large and fast-growing government debt .

It has reached the point where some central bankers are suggesting they may need to lower the interest rates they control in order to offset that increase in borrowing costs.

U.S. Economy Americans Have More Investment Income Than Ever Before

Lynn Hogan and her husband jokingly call themselves "the turtles" after methodically investing for decades . In the current race against inflation, which has made trips more expensive and $200 grocery bills not uncommon, the mostly retired educators are among those keeping pace.

Growing investment income and household wealth have joined near-full employment and rising wages to keep millions of Americans such as the Hogans spending their way through price hikes.

The economy's charge through higher interest rates is putting unprecedented sums into consumers' pockets, pushing U.S. asset values to records and helping many high earners avoid the withering effects of inflation.

Financial Regulation Court Hands Private Equity, Hedge Funds a Win on SEC Fee Rules

A federal court in New Orleans handed Wall Street a win Wednesday , striking down a set of rules the Securities and Exchange Commission issued that would have governed the terms private-equity and hedge-fund firms set with their investors.

Forward Guidance Thursday (all times ET)

8:15 a.m.: ECB interest-rate announcement

8:30 a.m.: U.S. international trade in goods and services

4:30 p.m.: Federal discount window borrowing


8:30 a.m.: U.S. employment report

10 a.m.: Monthly wholesale trade

12 p.m.: Fed governor Lisa Cook speaks at the Girls Global Academy commencement ceremony

3 p.m.: Consumer credit

Research Dollar's Scope to Fall After Fed Rate Cuts Start Looks Limited

The dollar could weaken once the Fed starts to cut interest rates but any depreciation is likely to be limited given its global dominance and the risks to U.S. inflation from U.S.-China tensions and U.S. protectionism, Rabobank says. The dollar remains "by a very wide margin" the most used global currency even though its share of global trade has fallen as emerging markets expand and despite attempts by China, Russia and its allies to sidestep the U.S. currency, Rabobank forex strategist Jane Foley says in a note. "Additionally, the inflation implications of potentially higher trade tariffs on China post the U.S. election suggest that the forthcoming rate cutting cycle from the Fed could be short-lived." - Renae Dyer

Basis Points Bank of Canada's overall tone in its official statement, and Governor Tiff Macklem's press conference remarks, both point to further rate cuts, says Doug Porter, chief economist at BMO Capital Markets. "A bit more dovish than we would have expected, but still with a healthy dose of caution," he says. - Paul Vieira Jefferies expects the European Central Bank to cut interest rates three times this year, starting with a 25 basis-point reduction on Thursday, though the number of rate cuts could be subject to the Fed's policy, Mohit Kumar, chief European economist at Jefferies, says in a note. "Our base case remains for a cut in June, September and December," he says. "But the pace of rate cuts will be dependent on the U.S. and the Fed." - Emese Bartha Bank of Japan policy board member Toyoaki Nakamura said Thursday that he is still not fully confident that wages and inflation will keep growing , adding that it is appropriate for the bank to maintain its current monetary policy for the time being. - Megumi Fujikawa German manufacturing orders unexpectedly fell in April , reflecting the persistent difficulties in the industrial sector even as Europe's largest economy gradually recovers. - Ed Frankl Keith Gill placed a big bet on GameStop, then single-handedly moved the stock higher by returning to social media. Was that market manipulation? - Alexander Osipovich About Us

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ's global team of reporters and editors. This newsletter was compiled by markets reporter Hardika Singh in New York. Send your tips, suggestions and feedback to [hardika.singh@wsj.com].

This article is a text version of a Wall Street Journal newsletter published earlier today.


(END) Dow Jones Newswires

June 06, 2024 07:15 ET (11:15 GMT)

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Rate Cuts Are Already Here For One G-7 Economy (2024)
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