The ongoing week is a crucial one for the central banks in both Europe and Asia with the most notable decision by the US Federal Reserve as investors are expecting clues on the timing of the first rate cut. Other central banks including Bank of Japan (BoJ), and the Bank of England (BoE) will also announce their decisions on interest rates this week. Additionally, China will announce the loan prime rate for 1-year and 5-year loans. Japan will also announce the inflation rate on March 22.
“This week will place a significant focus on monetary policy, as the Fed will begin its two-day policy meeting on March 19. The US Federal Reserve will announce its interest rate decision after its two-day policy meeting on March 20, 2024,” said Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd.
Analysts at Reliance Securities said, “We expect the Federal Open Market Committee (FOMC) will opt to maintain key interest rates at current levels at the conclusion of its upcoming meeting on March 20. However, the focus isn’t on Wednesday afternoon’s decision for interest rates, but on what may happen months from now. The question is whether it will lower rates
in June as the bond market currently expects, and how many cuts to expect in 2024. Hints about the timing and scope of rate cuts could come from the Fed’s so-called dot plots, a
quarterly visual depiction of individual officials’ economic and interest rate forecasts.”
The US Fed, during its last meeting in December 2023, had announced to keep its benchmark interest rates unchanged, signalling three quarter-point cuts to their benchmark interest rate in 2024. The policy rate has been on hold since July.
Furthermore, the BoJ has been the only major central bank with interest rates in negative territory for a while now, but there are expectations that the Bank will finally raise them this week. Economists are hoping for the BoJ to deliver its first rate hike since 2007. Earlier in January this year, the Bank of Japan had decided to keep its monetary policy settings steady and adjusted its economic projections while offering no clear hints as to the timing for a potential end of the negative interest rate, an outcome that had nudged the yen weaker. The BOJ had maintained its -0.1 per cent short-term rate.
Here are major announcements awaited this week…
Monday: China retail sales and industrial production (February), eurozone trade balance (January).
Tuesday: BoJ interest rate announcement.
Wednesday: Fed interest rate announcement, China one-year loan prime rate announcement, UK inflation (February), eurozone consumer confidence (March).
Thursday: BoE interest rate announcement, Japan trade balance (February), US existing home sales (February), global PMIs (March).
Friday: Japan inflation (February), UK retail sales (February).