Eurozone central bankers once again held their key interest rates at levels set last June, but the next steps for monetary policy are much more unclear as fighting continues in and around the Persian Gulf.

On Thursday, the European Central Bank decided to stay the course for a sixth straight meeting, as predicted by economists. Officials left their benchmark discount rate at 2%, a repeat of previous policy that followed similar decisions this week to stay the course by central banks in Canada, the US, the UK, Switzerland, and Norway.

Headline annual inflation in the Eurozone remains near the ECB’s target range of 2% over the medium term. It rose unexpectedly to 1.9% last month from 1.7% in January, which prompted some commentators to suggest the bank could take a more hawkish stance this week. As the Iran war drives oil and LNG prices to multi-year highs, the hawks are circling, but the doves could still have a say as economic concerns have also become more salient. (LiveSquawk – Continue Reading)

The Bank of England has voted unanimously to keep rates on hold at 3.75%, opening the floodgates for markets to price in more rate hikes. At the time of writing, two-year rate expectations are 25bp higher – representing a full extra hike priced in – since the minutes before the announcement.

Yet we shouldn’t get too carried away by what this decision tells us about future policy. Yes, the Bank has opened the door to a hike – and crucially, so have some of the arch-doves. That is what markets are understandably latching onto. But, importantly, the Bank also concedes this is a very different economic environment from 2022. It doesn’t rule out this crisis fostering a greater need to lower rates further, either.

Nor should we read too much into the unanimous vote behind today’s decision. Most likely, the same fault lines that had become very visible over recent months will re-emerge. (ING – Continue Reading)

Cracks are emerging among congressional Republicans over the Iran war with key lawmakers skeptical about spending hundreds of billions of dollars to prolong the conflict and several refusing to support any money without a clear White House strategy.

In the coming weeks, President Donald Trump could ask Congress to spend as much as $200 billion to fund the ongoing war. But it will be enormously difficult to pass. GOP leaders do not believe they have the votes to fund the war even in their own party without far more detailed plans from the White House, according to multiple people involved in those preliminary discussions.

Trump previewed the funding request on Thursday, saying he wants to ensure the military has “vast amounts of ammunition” but without offering specifics on what the Pentagon needed the funding for. (CNN – Continue Reading)

Goldman Sachs Group Inc. and JPMorgan Chase & Co. are among investment banks offering hedge fund clients ways to bet against the $1.8 trillion private credit market, people with knowledge of the matter said.

The firms have assembled baskets of listed companies with exposure to the space, the people said, who requested not to be identified discussing bespoke product offerings. (Bloomberg – Continue Reading)