Oliver Mangan: Markets start to price in rate cuts for this year

European Central Bank president Christine Lagarde warned the tensions seen over the past couple of weeks are not trivial.

The stresses that have emerged in parts of the global banking system, and the associated volatility this has generated on financial markets are now weighing on central banks' monetary policy decisions. The US Fed, in particular, is clearly worried about the economic implications, having mulled over not increasing rates at all, at last week’s policy meeting.

Nevertheless, it and three other major central banks still went ahead and increased rates over the past fortnight. However, it now seems that we are nearing the end of the rate hiking cycle, with just some modest additional tightening likely in the next couple of months and rate cuts starting to be priced in by markets for later in the year.