The Week Ahead - 17 - 21 March 2025

US – The main event next week is the FOMC meeting. We expect the Fed to hold rates steady, and to give some pushback against more aggressive easing recently priced in by the market. Our February core PCE nowcast is on the edge of 0.3 and 0.4% m/m, which will likely push up the projected inflation path, and with substantial further upside risks, delay rate cuts. While market pricing has moved to three 25bps cuts for the rest of the year, we expect the Fed Dot plot to either stay at a median of two cuts or even move to one. On Monday, before the fed meeting, we will get retail sales for February, which we expect will show a limited rebound from last month's decline at 0.5%. Control group sales may see a more limited 0.1% rise.

The Netherlands – We expect the unemployment rate to come in at 3.8% for February, unchanged from the previous month. Although the unemployment rate climbed to the two-year high of 3.8% in January, it remains historically low. The Dutch labour market continues to be a bottleneck, with companies continuing to report that labour market tightness is their primary challenge. Although the labour market is expected to gain some breathing space, we think the unemployment rate will remain low given still high labour demand, limited labour supply, and a greying population.

China – Activity data for January-February combined due on Monday are expected to confirm the resilience of the economy, despite the start of a new tariff war with the US in early February. On Thursday, general expectation is for the 1-year loan prime rate to be kept on hold (3,10%) in line with previous PBoC rate decisions. Going forward, we expect more policy rate and RRR cuts, although the PBoC is probably not in a hurry given the latest economic data and may want to wait until more is known about further US tariff plans.

Japan – On Wednesday, we expect the Bank of Japan (BoJ) to keep its policy rate unchanged at 0,50% for now (in line with consensus), although Governor Ueda may signal the conditions are getting in place for further hikes. We still expect the BoJ’s hiking path to remain very cautiously and gradually, while US tariff plans and its macro effects will likely also impact this path going forward.