Central banks will again dominate the week ahead – specifically the US Federal Reserve, the Bank of Japan, the Reserve Bank of Australia, the Swiss National Bank and the Bank of England.
The meetings and reports come a few days after the momentous European Central Bank meeting last week that expanded its quantitate easing, cut interest rates and started a scheme to pay banks to lift their lending.
The speculation and market reaction ahead and after three meetings this week – the Fed, Bank of Japan and Band of England – will overshadow some important figures in America and Australia where the February jobs report will be finally issued.
The Fed meets Tuesday and Wednesday nights our time, and the Bank of England releases its statement on Thursday night, our time, less than a day after the Fed’s statement is issued. The Bank of Japan meets today and Tuesday and releases its statement at the end of the discussions tomorrow afternoon.
No one is expecting the Japanese central bank to do anything after its ham-fisted handling of the move to negative interest rates on January 29.
But top of the list is the two-day meeting of the US Federal Reserve which will end early Thursday morning with the usual post meeting statement – and this time, updated forecasts on the economy and interest rate projections, plus the quarterly media conference for chair Janet Yellen.
All in all a busy meeting and markets are looking for the Fed to firm up its thinking on the next interest rate rise or two.
The US economy is doing better than thought a month ago, and markets are recovering their poise after the start of year sell-off.
As well, commodities led by oil have rebounded solidly and inflation is starting to re-emerge in some parts of the economy.
New job creation remains solid and consumer spending is higher than previously thought, so the conditions for a rate rise in six weeks time at the next Fed meeting, is on the cards.
On the data front in the US, retail sales for February figures are out tonight, our time, and analysts are looking for a small increase (after accounting for falling petrol prices).
Housing starts for February are out Wednesday night, our time , along with industrial production figures plus consumer price inflation data.
All three are expected to show a rise – housing from the slide in January, production after the weakness at the start of the year, and underlying inflation will be up a bit despite weak petrol prices.
Manufacturing conditions surveys will also be released for the New York and Philadelphia regions along with data on job openings (the so-called jolts survey).
And the US presidential primaries continue this week.
Meanwhile the Bank of Japan meeting is unlikely to cut its deposit rate further into negative territory after the bad reaction to its January cut, but it could undertake an expansion of its quantitative easing program, according to AMP chief economist Dr Shane Oliver.
In Australia the monthly employment figures on Thursday (not last week) is forecast to see a small rise in the number of new jobs and no change in the jobless rate of 6%.
The RBA will also release the minutes from its last meeting tomorrow, and Assistant governor Guy Debelle speaks at a foreign exchange conference on Thursday. The RBA’s latest quarterly bulletin is also out on Thursday.
And on Friday Luci Ellis, the head of the RBA’s Financial Stability department, speaks at a financial risk conference in Sydney.
In Europe, the UK budget is on Wednesday night, our time, and we can expect heavy cost cutting and a lot of angst as the Cameron government’s failed policy statements of last year come home to roost.
And the Swiss National Bank delivers its quarterly policy assessment on Thursday night.
