Macrocast report – Causes and FX by Gilles Moëc

• The Federal Reserve is unlikely to cut rates soon despite some positive signs in the US economy, as core inflation remains too high. However, a cut is still expected later this year if the economic slowdown continues.
• The European Central Bank (ECB) is likely to cut rates in June as inflation pressures ease and the economy weakens.
• The Bank of Japan is in a difficult position as it tries to balance the need to weaken the yen to support exports with the risk of stoking inflation.
• The global economic outlook is uncertain, as the US Federal Reserve's monetary policy tightening could have negative spillover effects on other countries.
• The US dollar is likely to remain strong in the near term, which could benefit US exporters but hurt emerging markets.

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