Economic Analysis

The Bank of England’s Monetary Policy Committee (MPC) meeting for may saw the central bank cut the Bank rate by 25bps two 4.25% marking its second rate reduction this year (previously cut at February MPC). Futures contracts in the lead up to today's meeting had 25bps rate cut fully priced in once again there was no unanimity within the MPC on its decision to cut rates today the voting breakdown showed an 5:4 split. 

As expected the May meeting of the US Federal Reserve Open Market Committee (FOMC) saw the central bank, once again leave policy on hold. The target range for the Fed funds rate was maintained at 4.25%-4.50% for a third consecutive meeting the decision by the FOMC to leave rates unchanged was unanimous. The most recent rate changes from the feds occurred over its final three meetings of 2024 when it reduced rates by a total of 100bps.

President Trump’s tariffs have unwound decades of global trade liberalisation, jolting markets and leading to revisions in global growth forecasts.The ultimate impact of the tariffs remains unclear given the volatility of US trade policy announcements. Most forecasters expect the greatest hit to be on the US domestic economy. Central bank outlook clouded by trade policy uncertainty.

The April meeting of the ECB Governing Council saw he central bank cut interest rates for a third consecutive time this year. It reduced them by 25bps, with the Deposit rate lowered to 2.25%. while the Re-fi rate was decreased to 2.40%. This marked the seventh 25bps rate cut since the ECB  started its easing cycle in June 2024. The changes to the official interest rates were in line with the market expectations. 

The manufacturing PMI eased to 51.6 in Mar, indicating a slightly slower pace of growth. Output rose and new orders growth accelerated, while export orders expanded for the first tine since Jan 2024 

Historic FX & Interest Rates for 2024....

Growth in Ireland’s key trading partners uneven, geopolitical risks to the fore. Irish economy expected to grow at a moderate pace in the coming years. Households remain cautious in spending patterns. US dollar dominance tested by macro trends.

Renewed momentum in Irish residential property prices...