1. New World Order
Global markets, Central Bank officials, companies and consumers are trying to cope with the turmoil brought by the new world order.
While US President Donald Trump has changed his decimal US foreign policy, the customs duties implemented without friends and enemies may have permanent effects on trade. Some are concerned about shaping an order between the United States, Russia and China that divides the world into three.
Germany’s new prime minister Friedrich Merz, for Europe, “Five minutes left for midnight,” he warned that Russia and an unreliable US may leave the continent vulnerable.
The German Parliament will vote for a large -scale financial support package to increase defense expenditures next Tuesday. On the other hand, Trump’s efforts to make a ceasefire between Ukraine and Russia are gaining momentum.
JPMorgan’s chief economist warned that Trump could permanently damage the US position as an investment center, if Trump shakes confidence in governance.
Market participants closely monitor how to shape the sales wave in the Wall Street.
2. Fed’s interest rate decision
While the markets become increasingly fragile, the US Federal Reserve (FED) will be followed by the tips on whether or not to start the interest rate reduction in the coming months at the monetary policy meeting next week.
The FED is expected to keep interest rates constant on Wednesday next week. FED fund futures contracts indicate that the first interest rate cut in June and about three interest rate cuts can be made by the end of 2025.
Trump’s new customs duties brought to the United States’s neighbors and allies, the uncertainty of the US economy increased the growth of the growth of the Fed’s expectations that the interest rate reduction will start again.
The Consumer Price Index (CPI), which was published in the US this week and announced below expectations, will strengthen the possibility of interest rate reduction a little, while the effects of new customs duties on inflation will have to be taken into account. This creates a great uncertainty for business and consumers.
3. Not finished yet
The central banks of the Central Banks that will announce interest decisions next week include England, Sweden and Swiss Central Banks.
The Central Bank of the UK (Boe) is expected to keep interest rates constant. Keeping interest rates constant can save Boe time before the possible quantitative expansion it will make in the continuation of this year.
The Swedish Central Bank is expected to keep interest rates constant. Riksbank’s keeping interest rates constant may indicate that this cycle will end in Sweden, which has the most aggressive relaxation cycle among the central banks of developed countries.
In general, in Switzerland, which tries to keep interest rates at a low level, events take place differently. The Swiss Central Bank (SNB), which has the lowest interest rates among G10 countries, is expected to reduce its policy rate to 0.25 %.
4. Preparation for salary increases in Japan
Although conditions seem to have conditions for raising interest rates of the Central Bank of Japan (Boj), it seems that it will not be soon.
BOJ President Kazuo Ueda, waiting for the regular increase in wages to increase consumer expenditures, made a pro -financial tightening speech in the parliament on Thursday.
Japan’s largest workers’ trade unions are expected to demand an average salary increase of approximately 6 percent in the negotiations to be held in spring. In fact, a union has successfully resigned from the negotiations on an average increase of 5 percent.
5. Combating Inflation
The fight against inflation continues to remain on the agenda for central banks of almost all developing countries.
In recent years, the FED and other developed countries have left behind and tightening in monetary policy, Brazil can increase interest rates again on Wednesday by increasing 100 basis points again, increasing the highest level of the last eight years to 14.25 %.
The South African Central Bank (SARB) will announce the next Thursday interest rate decision. Most economists expect SARB to keep interest rates fixed next week, but in the future it sees that there is a tendency to interest rate reduction.
