
Bank of England's decision: rate cut in focusToday, the Bank of England is expected to lower its base interest rate by 25 bps, to 4.50%. This is in line with market expectations and analysts' forecasts. The decision is likely to be made by a majority of votes (8-1), while Catherine Mann, a member of the Monetary Policy Committee, known for her hawkish attitude, may vote for the unchanged rate. The regulator is likely to maintain a cautious tone, noting that “a gradual easing of monetary policy remains appropriate”. However, a softer mood is possible at the press conference, given the emerging risks of declining economic growth.Macroeconomic data: key releasesIn the United States, preliminary labor productivity statistics for the fourth quarter will be published today. High rates of productivity growth are restraining the growth of labor costs, despite the increase in nominal salaries. Mary Daley, President of the Federal Reserve Bank of San Francisco, is also scheduled to speak in the evening, which may shed light on the prospects for US monetary policy.In the Eurozone, retail sales data for December will be released. Over the past six months, this indicator has shown positive dynamics, indicating a recovery in consumer activity.In Sweden, the key event of the day will be the publication of the preliminary inflation estimate for January. The CPIF is projected at 1.54% (versus 1.79% for Riksbank and 1.6% consensus), and the CPIF excluding energy resources is 1.94% (versus 2.41% for Riksbank and 2.1% consensus). Weaker data may strengthen the case for monetary policy easing by the Riksbank. However, the preliminary estimate will not provide detailed information on the components of inflation and their specific weight.Markets and economic newsThe data on the PMI index in the Eurozone confirmed the preliminary estimates. The aggregate index was 50.2, and the index of business activity in the service sector was 51.3. However, there were different dynamics within the region. In Germany, the PMI was revised up due to an improvement in the industrial situation, while in France and Spain, the indicators decreased. The recession in Spain, which has remained the main driver of growth in the Eurozone in recent months, is particularly noteworthy. Nevertheless, its cumulative PMI remains at 54.0, which indicates stable growth.In France, the prime minister was able to avoid a vote of no confidence and approved the budget for 2025, aimed at reducing the deficit. A compromise with the Socialists made it possible to advance this bill.In the US, the ISM index in the service sector turned out to be weaker than expected, amounting to 52.8 against the previous 54.1 and forecast 54.3. This put pressure on the dollar, contributing to the growth of EUR/USD. Business activity, new orders, and price indices also declined. At the same time, the labor market is showing resilience: according to the ADP report, employment in the private sector increased by 183,000 in January (150,000 expected), which confirms the stability of the labor market.In Norway, housing prices rose by 1.4% mom in January, seasonally adjusted, which is significantly higher than Norges Bank's forecast (0.5%). This may cast doubt on the need to lower interest rates in the country, but Central Bank Governor Ida Woldenbache previously stated that the current situation in the housing market does not have a decisive impact on the regulator's policy.Stock markets: growth amid mixed macro dataGlobal stock markets ended yesterday with growth. The sectoral dynamics varied: in Europe and the United States, the performance of large companies varied markedly, but defensive assets were confidently ahead of the market on both sides of the Atlantic. Despite the decline in bond yields and mixed macroeconomic indicators, the banking sector showed positive dynamics.In the United States, the Dow Jones index rose 0.7%, the S&P 500 rose 0.4%, the Nasdaq rose 0.2%, and the Russell 2000 index of small companies added 1.1%. There is also a positive trend in Asia, and futures on European and American indices indicate continued growth.Bonds and the foreign exchange marketEuropean yields continued to decline at the long end of the curve, while short-term rates rose following comments from Philip Lane of the ECB about a possible delay in rate cuts. In the United States, on the contrary, weak ISM data and the stable plans of the Ministry of Finance for the placement of bonds supported 30-year bonds. In the short term, markets remain focused on the balance between inflationary risks and the prospects for policy easing.The EUR/USD pair has fully recovered after falling at the beginning of the week, returning to 1.04. USD/JPY continues to decline, being just above 152. The GBP/USD pair adjusted after rising the day before, in anticipation of the Bank of England's decision.The Swedish krona (SEK) is showing strengthening: EUR/SEK stopped at 11.35, and NOK/SEK – 0.97, awaiting inflation data in Sweden. The Polish zloty (PLN) also strengthened, bringing EUR/PLN back to the 4.20 support.ConclusionsThe rate cut by the Bank of England, weak ISM data in the United States and the stability of the labor market create conditions for increased volatility of currency pairs and stock assets. Investors' focus remains on regulatory decisions and market reactions to macroeconomic indicators.