| I'm Chris Anstey, a senior editor in Boston, and today we're previewing what to look for in Wednesday's Fed policy announcement. Send us feedback and tips to ecodaily@bloomberg.net or get in touch on X via @economics. And if you aren't yet signed up to receive this newsletter, you can do so here. - UK house prices fell at the sharpest pace in eight months.
- The maker of obesity drug Ozempic is dominating the Danish economy.
- The Japanese yen's wild swings may be just a taste of what's to come.
It's probably lucky that Federal Reserve policymakers aren't due to update their forecasts for interest rates on Wednesday. A series of disappointingly high inflation readings means the three rate cuts that formed the median projection as of March seem woefully out-of-date now. As of Tuesday, interest-rate derivatives reflected investor expectations for just one reduction, at the tail-end of the year. At the same time, Chair Jerome Powell and at least some of his colleagues on the rate-setting Federal Open Market Committee likely want to preserve the option for multiple cuts. Removing that option entirely from the official forecasts could send longer-term borrowing costs climbing — potentially imposing more economic restraint than policymakers want. With no new forecasts, Powell has maximum flexibility to deliver the message he wants in the press conference scheduled for 2:30 p.m. in Washington, half an hour after the FOMC is widely expected to announce no change in rates for a sixth straight meeting. (As noted in yesterday's newsletter, the main news at 2 p.m. is likely to be about the Fed's bond portfolio.) The US team at Bloomberg Economics says: "We expect Powell to make a hawkish pivot at the April 30-May 1 meeting. At the minimum, he'll likely indicate the median FOMC participant now expects 'less' cuts this year. In a more hawkish direction, he could hint at a chance of no cuts — or even suggest a hike might be on the table, though not the current baseline." Financial markets have already shown signs of concern about just how hawkish a shift Powell may make. Stocks on Tuesday closed out their worst month since the big late-2023 rally got going in anticipation of an easier Fed stance coming this year. Two-year Treasury yields also hit their highs for 2024 so far. The overarching theme from Powell is bound to be "wait-and-see," says Michael Gapen, head of US economics at Bank of America. "The answer to stickier inflation is you just stay where you are for longer." - Unionized workers in the US saw record pay raises, while nonunion workers' income barely beat inflation over the past 12 months.
- Mexico's economy posted small growth in the first quarter compared to the previous three-month period, as policymakers consider whether to deliver an additional interest rate cut at next week's meeting.
- South Korea's export growth accelerated in a sign the economy can sustain momentum after a faster-than-expected expansion last quarter.
- New Zealand's jobless rate rose to a three-year high in the first quarter and employment unexpectedly fell as high interest rates cooled demand.
- On the southern coastline of Greece's capital, a long-awaited plan to transform the city's former airport into the largest smart city in Europe is finally gaining momentum.
- Tenants in New York City's 1 million rent-stabilized apartments are on track to face the third year in a row of rent increases.
Germany's return to economic growth last quarter isn't just a "flash-in-the-pan," Andreas Rees, chief German economist at UniCredit Bank in Frankfurt, wrote in a note after data showed a 0.2% quarterly advance in GDP, the first increase in a year. "The consumer has still been in 'winter sleep' in the first quarter, as flagged by depressed levels of consumer confidence," Rees wrote Tuesday. "The combination of a robust labor market, comparatively strong wage hikes and lower inflation compared to last year will finally lead to a moderate recovery in consumer spending in the next few quarters." Bottom line: "The German economy is unlikely to fall back into recessionary territory in the further course of 2024." Long-distance relationships... Read more reactions on X Qatar Economic Forum: On May 14-16, join heads of state, global business leaders and technology innovators in Doha to identify solutions to the major issues driving global boardroom conversations. Learn more here. | 
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