United States (Next FED Meeting 16/06/2021)

Summary: No expectation of interest rate increase in 2021, unless inflation moves materially above 2% in a persistent way.

The Fed left the target range for its federal funds rate unchanged at 0-0.25% and said it will continue to purchase bonds at a rate of $120 billion a month despite acknowledging a rise in inflation and the improvement in the economy. Policymakers noted that indicators of economic activity and employment have strengthened amid progress on vaccinations and strong policy support but stressed the pandemic continues to weigh on the economy, and risks to the outlook remain. Source: Federal Reserve

  • QUOTE : “With regard to interest rates, we continue to expect it will be appropriate to maintain the current 0 to ¼ % target range for the federal funds rate until labor market conditions have reached levels consistent with the Committee’s assessment of maximum employment and inflation has risen to 2 % and is on track to moderately exceed 2 % for some time. I would note that a transitory rise in inflation above 2 % this year would not meet this standard”. UNQUOTE

 Source : Transcript of Chair Powell’s Press Conference — April 28, 2021 (

The annual inflation rate in the US soared to 4.2% in April of 2021 from 2.6% in March and well above market forecasts of 3.6%. It is the highest reading since September of 2008, amid a surge in demand as the economy reopens, soaring commodity prices, supply constraints. There is also a base effect weighing as the coronavirus pandemic dented economic activity bringing the inflation rate to 0.3% in April 2020. Source: U.S. Bureau of Labor Statistics

  • QUOTE: “If we see inflation moving materially above 2% in a persistent way that risks inflation expectations drifting up, then we will use our tools to guide inflation and expectations back down” UNQUOTE

Source : Transcript of Chair Powell’s Press Conference — April 28, 2021 (

The US unemployment rate rose to 6.1 % in April 2021, from 6.0 % in the previous month and defying market expectations of 5.8 %, as more workers began looking for work and re-entered the labor market.Source: U.S. Bureau of Labor Statistics

  • QUOTE: “For the economy as a whole, payroll employment is 8.4 million below its pre-pandemic level. The unemployment rate remained elevated at 6 % in March, and this figure understates the shortfall in employment, particularly as participation in the labor market remains notably below pre-pandemic levels” UNQUOTE

Source : Transcript of Chair Powell’s Press Conference — April 28, 2021 (

FED Interest Rate Probability Source Countdown to FOMC: CME FedWatch Tool (
US Yield Curve (Bold Line: Current ; Dotted Line: 12 Months Ago) (Source: Refinitiv)

EU (Next ECB Meeting: 21/05/2021)

Summary: No expectation of interest rate increase in 2021.

ECB policymakers agreed that Euro Area financing conditions had remained broadly stable since the last monetary policy meeting in March thanks to the central bank’s decision to significantly increase the pace of net asset purchases under the PEPP, the account of April’s meeting showed. However, members recalled that the monetary policy meeting in June would provide the next opportunity to conduct a thorough assessment of financing conditions and the inflation outlook, as they seemed especially concerned about the firming of the euro against the dollar. source: European Central Bank

  • QUOTE: “We will keep the key ECB interest rates unchanged. We expect them to remain at their present or lower levels until we have seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2 per cent within our projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics.” UNQUOTE


The Eurozone consumer price inflation is expected to accelerate to 1.6 % year-on-year in April of 2021, the highest level since April of 2019 and in line with market expectations, a preliminary estimate showed. source: EUROSTAT

  • QUOTE: “Inflation has picked up over recent months on account of some idiosyncratic and temporary factors and an increase in energy price inflation. At the same time, underlying price pressures remain subdued in the context of significant economic slack and still weak demand.” UNQUOTE


The Euro Area seasonally-adjusted unemployment rate dropped to 8.1 % in March of 2021 from 8.2 % in the prior month and below market expectations of 8.3 %. source: EUROSTAT

  • QUOTE: “Business surveys indicate that the manufacturing sector continues to recover, supported by solid global demand. At the same time, restrictions on mobility and social interaction still limit activity in the services sector, although there are signs of a bottoming-out.” UNQUOTE


ECB Interest Rate Probability (Source: Refinitiv)
EU Yield Curve (Bold Line: Current ; Dotted Line: 12 Months Ago) (Source: Refinitiv)

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