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Wholesale Banking

ING’s March monthly economic outlook: the search for a new equilibrium

Recent optimism may have been short-lived as a more prolonged period of subdued growth is anticipated in the eurozone, and the US economy is also expected to experience a significant slowdown. The major economies are still not in harmony, and it is unclear how they will achieve renewed balance. Read below how March’s developments could affect your business.

1. The search for a new equilibrium

The optimism regarding a swift economic recovery and a shift in approach by central banks proved short-lived. The eurozone is expected to experience an extended period of subdued growth, while a substantial slowdown is also anticipated for the US economy. It's not surprising that markets and analysts find it difficult to gain a clear perspective on the whole situation. Find out more about what we expect in our article on Think.

2. Commodities: Energy concerns ease further

In February, energy prices experienced further pressure, this was especially true for natural gas. Currently, natural gas storage is looking increasingly comfortable in both Europe and the US. At the same time, oil prices continue to trade in a range-bound manner. Read more on Think.

3. Our latest major central bank calls

We now expect the Fed funds rate to peak at a higher level, but still think rate cuts are likely by year-end. The European Central Bank is likely to slow the pace of hikes beyond March, while the Bank of England looks very close to the end of its tightening cycle. Learn about our expectations on Think.

Andrew Bailey (BoE), Christine Lagarde (ECB) and Jerome Powell (Federal Reserve)

4. US: Smoke, mirrors, and uncertainty by the truckload

Strong figures for the beginning of the year have led to a consensus in the market that interest rates will remain high for an extended period. And while the Federal Reserve is expected to increase interest rates more than we initially anticipated, raising borrowing costs in an environment of tightening lending standards and weak sentiment could potentially have a negative impact in the future. This situation runs the risk of prompting an adverse reaction down the line. Read what we expect for the US economy on Think.

5. Eurozone: Better than expected doesn't mean good

Lower energy prices have boosted both business and consumer confidence. However, the better growth outlook will slow the decline in core inflation, pushing the ECB to act more forcefully. Consequently, the economy will slow down during the second half of the year and 2024’s growth is likely to be weaker than 2023’s expansion. Find out what we think will happen in the Eurozone on Think.

Read the full March Monthly economic outlook with many more interesting articles and topics.