Central banks are on the “radar” of the markets

The central banks will be firmly on the markets’ radar all this week, as ten of them are expected to make major monetary policy decisions. A big question mark remains for almost all of them inflation, which has brought them to a crossroads after many months of continuous increases in the cost of borrowing.

The Bank of Japan starts today on Tuesday, while attention will then turn to the US Federal Reserve on Wednesday, where Jerome Powell will also have to give a signal about what will happen to the dollar’s interest rates. Also on the same day, monetary policy is expected to be announced by China’s central bank, at a time when the country’s economy is facing major challenges due to the crisis in the real estate sector and low consumption. A decision is expected even from the central bank of Brazil.

A day later, a series of monetary policy decisions are expected from the Bank of England, Switzerland and Norway, as well as Mexico and Taiwan. The central bank of Turkey also meets on the same day in an environment of very high inflation.

The Fed, which along with the European Central Bank are major barometers for markets, are now expected to be forced to keep interest rates high for longer than markets had previously expected, according to economists polled by the Financial Times. ».

After months of waiting for immediate monetary policy easing, it now appears that two-thirds of respondents to the survey think the Fed will cut twice this year as it continues to be troubled by persistently high rates. Market players believe that a first reduction in US interest rates may take place in June or even be moved to September. In the latter case, this would make the work of the European Central Bank, which is expected to make the first reduction in June, more difficult.

Other market players expect the Fed to cut rates three times this year. On Wednesday the US Federal Reserve through the mouth of Jerome Powell is expected to present new forecasts and give a further signal to the markets about what is going to happen next. Today the Fed’s key dollar lending rate is in the range of 5.25% to 5.5%. In the US last week data showed higher than expected inflation. On an annual basis, the consumer price index stood at 3.2% in February from 3.1% in January.

This will be an important week for UK inflation. New data is expected to be released on Wednesday, and a day later the Bank of England (BoE) will be called upon to set monetary policy. Market forecasts suggest the BoE will likely keep interest rates unchanged at 5.25% and everyone will be waiting to see some signal on the way forward.

For Turkey, forecasts are more difficult since the country’s central bank has accustomed the markets to more surprises. As inflation soars in Turkey, the central bank’s earlier decision to end monetary tightening is being called into question as policymakers urge patience, saying prices will ease this year, China’s Xinhua news agency reported.

Official data released on March 4 showed that Turkey’s annual inflation stood at 67.07% in February, beating market expectations. This was done, among other things, through significant increases in food prices.