Global markets are going on a “monetary policy marathon” from Tuesday to Friday. The risk that the increase in energy costs will reignite inflation makes bankers’ hands more difficult.
Weekly decision traffic is very intense. Australia, the Fed, Canada, the UK, the European Central Bank, Japan, Switzerland and China will announce their decisions this week.
Today: Australia (RBA) – will set the tone for the week.
Wednesday: US (Fed) and Canada – The main focus of the day and week.
Thursday: UK (BoE), Europe (ECB), Japan (BoJ) and Switzerland – busiest day.
Friday: China – closing signal for the week.
“Hawk” Voices Rising in the Fed and Europe
Swissquote Senior Analyst İpek Özkardeşkaya states that monetary policy makers are likely to adopt an increasingly hawkish attitude. According to Özkardeşkaya, the main problem is; The fine line between oil-induced inflation and the risk of rising unemployment.
USA: Was Interest Rate Cut Just a Dream?
It is certain that the Fed will keep interest rates steady this week. However, the data is not encouraging. The US economy grew by only 0.7% in the 4th quarter, below expectations. Core PCE, a leading indicator of inflation, jumped to 3.1% in January.
“If the war continues to keep energy prices high, we may not see a rate cut this year.”
Europe and the UK: Fear of Stagflation
The ECB and BoE, which had been talking about interest rate cuts until a few weeks ago, may change the course to tightening again with the increase in oil prices. Signs of recession shown by the British economy in January narrow the bank’s room for maneuver.
Japan and Australia: Normalization or increase?
Australia: Markets expect second consecutive increase; The expectation is that the interest rate will be reduced to 4.10%.
Japan: The depreciating yen and rising energy costs may force the BoJ to completely break away from years of loose policy.
The Swiss National Bank is expected to keep interest rates steady thanks to the strong franc, which helps offset the impact of the increase in oil prices on inflation.
