EU-RUSSIA: EU's Kallas-Officials Working on 17th Sanctions Package For May
At a press conference following the conclusion of the Foreign Affairs Council meeting in Luxembourg, EU High Representative for Foreign Affairs and Security Policy Kaja Kallas said that EU officials are working on a 17th package of Russia sanctions ahead of the 7-8 May informal 'Gymnich' meeting of EU foreign ministers in Warsaw. Calls for the imposition of stricter sanctions on Russia have grown louder over the past 24 hours in the wake of a Russian ballistic missile attack on the Ukrainian city of Sumy in which dozens were killed. Kallas did not go into specifics on the package, saying only that it would target Russia's “shadow fleet and different elements”.
- Kallas: “Ukraine agreed to unconditional ceasefire already a month ago, and yet we are seeing that Russia alone wants war, because we have seen the deadliest attack …Sumy airstrike over the weekend. It is clear that they are stalling and not wanting peace at all.”
- Hungary is likely to offer the most resistance to any new sanctions package. After the FAC meeting, Szijjarto posted on X: "A set of fanatic, pro-war initiatives at today’s FAC. Billions more for Ukraine, more weapons, deploying military advisers, new sanctions on nuclear energy & push to open all accession chapters this year. We support none of it. Time to end the failed policy of the last 3 years." He said Budapest would oppose any sanctions on Russian energy imports, as well as any EU military training mission taking place on Ukrainian soil.
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FED: March Economic Projections: Higher Inflation, Weaker Growth, Same Rates
The MNI Markets Team’s expectations for the updated Economic Projections in the March SEP are below.
- The unemployment rate is likely to rise slightly for 2025 alongside a downgrade in GDP growth, while the 2025 core and headline PCE inflation projections are set to rise again. Changes to later years will likely be limited, however.
- More detail on the shift in Fed funds rate medians is in our meeting preview - we will add more color next week.
FED: Market Pricing Nearly 3 2025 Cuts As Conditions Tighten
Amid rising government policy uncertainty, sentiment among businesses and consumers has fallen sharply since the start of the year, while equities and the dollar have reversed their post-election rise. Overall, financial conditions have tightened, even if stress is not yet mounting, e.g. no major widening of credit spreads (the accompanying chart shows the Fed’s financial conditions impulse index but only through January).
- Combined with growth fears, this has affected expectations for the Fed’s rate path, with around 18bp more cuts expected in 2025 compared with what was seen after the January FOMC. 65bp of cuts are priced for the year as a whole. 2025 cut pricing reached 71bp before the February inflation data and 76bp before the February payrolls report.
- A rate cut is seen with near zero probability for March’s meeting, but the first full cut is just about priced for June, with a second nearly priced by September.
- Chair Powell has no reason to endorse or refute these expectations – he’s likely to be happy with a press conference that ends with little discernable change in pricing.
CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
- CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
