ECB and FOMC poised to maintain interest rates in March

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The ECB Monetary Policy Committee will be meeting this week but the market does not expect the central bank to cut interest rates at this point in time. Last week data revealed that eurozone yearly inflation slid from 2.8% in January to 2.6% in February, but the ECB is poised to maintain its focus on reaching the 2% inflation target. Today, the economic calendar features French government budget balance, Spanish unemployment change and Sentix investor confidence for the Eurozone. The fibre is currently trading at 1.0846.

The recently published Federal Reserve report has flagged several vulnerabilities in financial markets but acknowledged that the stress linked to the collapse of Silicon Valley bank, that roiled the banking sector a year ago has faded. The liquidity facility, Bank Term Funding Program, that was launched to help banks will be closed this month. The Fed reiterated that it was committed to bring inflation back to the 2% target and added that the FOMC will not cut interest rates until it is confident that inflation is sustainably falling to target. The resilience of the US economy coupled with the uneven path of inflation have pushed back market expectations about an interest rate cut in June. The market also expects that during his testimony this week, Fed Chair Powell will maintain his hawkish stance. The 3 and 6-month bill auction will be taking place during the day. The US dollar index is currently trading at 103.86.