The FOMC and PBoC expectedly kept interest rates at current levels. New Zealand’s economy came out of a recession

At Wednesday’s close, the Dow Jones Industrial Average (US30) was up 0.93%. The S&P 500 Index (US500) added 1.08%. The Nasdaq Technology Index (US100) jumped 1.41%. The Fed left the federal funds rate unchanged at 4.25-4.5% at its March 2025 meeting, extending a pause in the rate-cutting cycle that began in January and in line with expectations. Policymakers noted that uncertainty about the economic outlook has increased but still expect interest rates to fall by about 50 bps this year, the same as in the December prognosis. Meanwhile, GDP growth expectations for this year were revised downward to 1.7% from 2.1% in December.

Bitcoin (BTC/USD) traded near the $86,000 mark on Thursday, hitting its highest level in nearly two weeks during the session. Optimism is growing ahead of US president Donald Trump’s speech at the Blockwork digital asset summit later today. Trump will become the first sitting US president to speak at a digital asset conference, signaling his administration’s support for the industry. He has pledged to make the US the world’s capital of digital assets and recently created the Bitcoin Strategic Reserve and the US Digital Asset Reserve.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE40) was down 0.40%, France’s CAC 40 (FR40) closed up 0.70%, Spain’s IBEX 35 (ES35) added 0.40%, and the UK’s FTSE 100 (UK100) closed positive 0.02%. European equities rose for a fourth session on Wednesday, amid additional support from increased deficit spending as markets assessed the likelihood of a prolonged ceasefire between Russia and Ukraine. Meanwhile, Germany’s Bundestag approved an expected amendment to the debt brake that will boost budget spending on infrastructure and defense.

WTI crude oil prices traded near $67 per barrel amid rising US crude inventories and economic concerns weighing on prices despite geopolitical tensions. The latest EIA report showed a larger-than-expected 1.75 million barrel increase in nationwide inventories, although inventories in Cushing, Oklahoma, declined and fuel stocks fell.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) was down by 0.25%, China’s FTSE China A50 (CHA50) rose by 0.75%, Hong Kong’s Hang Seng (HK50) added 0.12%, and Australia’s ASX 200 (AU200) was positive 1.07%.

The Australian dollar fell below $0.635 on Thursday, marking the third consecutive decline, as traders reassessed the Reserve Bank of Australia’s (RBA) monetary policy outlook following weaker-than-expected employment data. Australia’s unemployment rate was unchanged at 4.1% in February, but the number of jobs unexpectedly fell, raising concerns about labor market softness. Market expectations for the next RBA rate cut continue to diverge, with some analysts predicting it will happen as early as May, while others expect it in July or August.

The New Zealand dollar fell to as low as 0.579 dollars on Thursday, even after data showed that the country’s economy came out of recession. New Zealand’s economy grew by 0.7% quarter-on-quarter in Q4, exceeding analysts’ expectations of 0.4% and the Reserve Bank’s expectations of 0.3%, after a revised 1.1% contraction in Q3. At the same time, annual GDP fell to a positive 1.1%, slightly better than the 1.4% decline expected. Despite the improvement, economic challenges remain and external factors, in particular escalating trade tensions, continue to pose risks. Expectations for policy easing remain firm, with markets expecting a rate cut of around 60 bps, equivalent to two or three rate cuts before the end of the year.

In March 2025, the PBOC kept key lending rates unchanged for the fifth consecutive month, in line with market expectations. The one-year prime rate, which is the benchmark for most corporate and home loans, was 3.1%, and the five-year prime rate, which guides real estate mortgages, remained unchanged at 3.6%. Both rates remain at historic lows after declines in October and July 2024. However, the PBOC noted that it will lower interest rates and adjust the bank’s reserve requirement rate at an appropriate time.