Market Information Thursday 30 January 2025

The Federal Reserve kept interest rates unchanged at 4.25%-4.5%, pausing recent cuts amid strong labor market conditions and persistent inflation. Chairman Jerome Powell emphasized that further reductions would require clear inflation progress or labor market weakness. Meanwhile, President Trump has pressured the Fed for immediate rate cuts, raising concerns of political friction. Inflation remains above the 2% target, and markets expect the next cut in June. Stocks fell following the announcement.

Germany slashed its 2025 GDP growth forecast to 0.3%, down from 1.1%, citing stagnation, labor shortages, and geopolitical uncertainty, including potential U.S. tariffs under Trump. The economy shrank 0.2% in 2024, and some industry groups predict another contraction in 2025. Inflation is expected to average 2.2% this year, while a modest recovery to 1.1% growth is projected for 2026. The upcoming federal election in February adds further uncertainty.

The Bank of Canada cut interest rates by 25 basis points to 3%, warning that Trump’s planned 25% tariffs on Canadian imports could fuel inflation and harm growth. The bank lowered its 2025 GDP forecast to 1.8% from 2.1% and expects inflation to reach 2.3%. With the economy shrinking on a per-capita basis for six consecutive quarters and immigration curbs likely to slow population growth, uncertainty remains high. Markets see a 43% chance of another rate cut in March.

The 6M Euribor decreased with 1 basis point to 2.59% compared to previous business day. The 10Y Swap increased with 1 basis point to 2.53% compared to previous business day.

In the attachment, today’s market data on money and capital market rates as well as other rates are presented.