Economic Analysis

The ECB's governing council meeting for June saw the central bank lower interest rates for a fourth consecutive time this year. It's once again reducing them by 25bps, With the deposit rate lowered to 2.00%., while the Re-fi rate was decreased to 2.15%. This Marked the eight 25bps rate cut since the ECB started its easing cycle in June 2024.

President Trump’s reciprocal tariff climbdown and de-escalation with China has driven a recovery in markets in recent weeks. However, the uncertainty created by the 90-day pauses and the eventual landing zone for US trade policy is expected to dent global growth, reflected in recent forecast downgrades Central bank outlook clouded by trade policy uncertainty, with the Fed holding pat on rates amid current uncertainty. We expect Fed cuts to resume in H2 2025.

The global economy entered 2025 in good shape, with indicators pointing to stronger growth in the Eurozone and UK, and continued robust, yet moderating growth in the US. However, the uncertainty created by the imposition of US trade tariffs, followed by partial 90-day delays, has created volatility in financial markets and concern in the real economy. 

The service, PMI fell to 52.8 in April, consistent with the slowest pace of expansion in the sector since Jan 2024. This was reflected in a slowdown in new business. Both input and prices charged inflation eased somewhat. Mortgage approvals rose by 3.4% in Q1. Overall, 43.6k approvals were registered over the past year.

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.

Historic FX & Interest Rates for 2024....

Renewed momentum in Irish residential property prices...