ECB Signals It's Moving Closer to a Cut but Keeps Rates Steady

ECB Signals It's Moving Closer to a Cut but Keeps Rates Steady By Hardika Singh

The European Central Bank's Christine Lagarde signaled growing confidence about a rate cut in June. Meanwhile, mortgage rates are ticking higher again, threatening the housing revival that many had hoped for this year. And Morgan Stanley's wealth arm is being probed by multiple regulators. Read on for this news and more.

Top News ECB Signals It's Moving Closer to a Cut but Keeps Rates Steady

The European Central Bank gave the clearest indication yet that it could cut interest rates in June, opening a new phase for financial markets and signaling a possible divergence with the Federal Reserve, whose path to monetary easing is becoming more rocky.

IMF Chief Warns Central Banks Against Cutting Too Soon New York Fed's Williams Says the Inflation Fight Isn't Finished

New York Fed President John Williams said the central bank had made "tremendous progress" toward balancing its goals of reducing inflation while promoting a strong labor market but said the Federal Reserve's job wasn't done.

Hannon's Take U.S. Inflation Is a Global Problem

The resurgence in U.S. inflation raises questions about whether the Federal Reserve will lower its key rate this year, and that makes life more complicated for central bankers everywhere .

Over recent months, many policymakers outside the U.S. had been working on the assumption that the Fed would lower its key rate three times in 2024, likely moving for the first time in June.

U.S. Economy Mortgage Rates Near 7% Again

Mortgage rates again rose to nearly 7%, a key psychological threshold that threatens the housing revival that many had hoped for this year.

Mortgage rates had eased some at the start of the year, helping to spur some activity in the sharply slowed-down market. But shifts in expectations for the Federal Reserve have pushed rates back toward 7%, a level they haven't reached since December.

Why Inflation Is Biden's Most Stubborn Political Problem

Inflation has emerged as the most intractable domestic policy issue facing President Biden less than seven months before the election-but there isn't a whole lot the White House can do to fix it .

Financial Regulation Morgan Stanley's Wealth Arm Probed by Multiple Federal Regulators

Multiple federal regulators are probing Morgan Stanley over how it vets clients who are at risk of laundering money through the bank's sprawling wealth-management division.

The Securities and Exchange Commission, the Office of the Comptroller of the Currency and other Treasury Department offices are involved, according to people familiar with the matter. That is in addition to the Federal Reserve, whose similar probe The Wall Street Journal reported in November. The Fed has told the bank that supervisory action is under consideration.

Forward Guidance Friday (all times ET)

2 a.m.: U.K. gross domestic product

2 a.m.: U.K. industrial production

8 a.m.: ECB's Elderson speaks at Delphi Economic Forum IX

10 a.m.: University of Michigan consumer survey, preliminary for April

2:30 p.m.: Atlanta Fed's Bostic in moderated conversation at Confronting America's Housing Crisis

3:30 p.m.: San Francisco Fed's Daly speaks at Fintech Conference: The Evolution of Fintech

Monday

2:30 a.m.: Dallas Fed's Logan at IMF-BOJ Conference: Gender Diversity in the Workplace

8 p.m.: San Francisco Fed's Daly gives keynote remarks to Stanford Institute for Economic Policy Research

Research U.S. Job Growth Boosted by Government Hiring

Government sector job growth averaged 2.7% year-over-year in 2023, Fitch Ratings says, as a recovery in government employment continued. The growth rate was the highest year-over-year since 1990, according to Fitch. Government employment post-pandemic lagged private sector employment growth, Fitch says, given that many educational institutions remained remote-only and had minimal staffing. Full recovery of all the government sector jobs lost to the pandemic took place in the second half of last year, over a year later than full recovery in the private sector, according to the agency. Government sector job growth averaged 64,000 a month in the first quarter, about 23% of average job growth during that time, Fitch says. - Stephen Nakrosis

Executive Insights

Here is our weekly roundup of stories from across WSJ Pro that we think you'll find useful.

In a landmark case, a group of Swiss women won their claim that authorities aren't doing enough to mitigate the effects of climate change. Lands' End is expected to report a profit for the first time in three years by nudging customers to pay full price . AI is coming for the enterprise as the technology is making deepfakes more lifelike than ever . Watch: How executives are talking about social purpose now . Basis Points Home borrowing costs have eased somewhat this year, with the average rate for a 30-year home loan down about a percentage point since October. But other prices related to homeownership keep rising and show little sign of abating. Property taxes and home-maintenance costs are climbing in much of the country. Non-mortgage costs including property taxes, maintenance, utilities and insurance make up more than half of homeowners' overall costs, according to a 2022 analysis by Fannie Mae economists. - Nicole Friedman Investors are on the lookout for more signs of trouble lurking in the U.S. financial system. Big banks raked in record profits in 2023 but face growing pressures this year. Losses from commercial real estate and bond portfolios are mounting, and bank stocks have lagged behind the broader market rally. - Alexander Saeedy Singapore's central bank kept its monetary policy unchanged as it cautioned that inflation is set to stay high for at least a few quarters. - Amanda Lee The U.K. economy continued to grow slowly in February as it looks to climb out a shallow slump, though calls will likely remain for the Bank of England to add some vigour via interest-rate cuts starting in June. - Joshua Kirby South Korea's central bank held its base rate steady for a 10th consecutive time, as widely expected, keeping its guard up against still-stubborn inflation. - Kwanwoo Jun 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

04-12-24 0716ET