Central banks in the US, Japan, UK, and Russia will all hold policy meetings next week to decide reference interest rates in these markets.
Next week will be the busiest week since the beginning of the year for global central banks. Lending rates in the world's most traded currencies will be set.
Since the pandemic and the war between Russia and Ukraine, the inflation picture of countries has become increasingly contradictory. While some countries have to continuously raise interest rates to suppress prices, others are struggling with falling prices. Therefore, the monetary policies of countries are also increasingly different. The results of next week's policy meetings will also reveal the views of financial officials in different countries on inflation risks.
The most notable event next week is the policy session of US Federal Reserve (Fed) on March 19 and 20. Investors will monitor this event to see whether recent vibrant economic reports will cause Fed officials to back off from raising interest rates.
Next week, the Fed is forecast to keep interest rates unchanged for the fifth consecutive time. Since May 5, this agency has increased interest rates by 5%. Currently, interest rates in the US are still the highest in more than 2022 years.
Fed Chairman Jerome Powell at a press conference in December 12. Image: Reuters
After vibrant employment and inflation data in the first two months of the year, Fed officials still affirmed that they will not rush to loosen. However, economists in a Bloomberg survey forecast that the Fed will still reduce interest rates three times this year. The first time is likely in June.
Notice of Bank of Japan (BOJ) is also considered important. This agency has maintained a negative interest rate policy since 2016 and has not raised interest rates since 2007.
Inflation in Japan has exceeded the BOJ's target of 2% for more than a year. Last year, Japan's core consumer price index (CPI) also increased by 3,1% - the highest in 41 years.
This agency is expected to raise profits at the March or April meeting. This possibility is increasing when on March 3, Japan's largest companies agreed to raise wages for workers by 4% in 15. This is the strongest increase in the past 3 years.
"However, we think the BOJ will declare it is too early to tighten," forecast Taro Kimura - economist at Bloomberg Economics.
European, Bank of England (BoE) and Switzerland are also gradually moving towards reducing interest rates. BoE will receive interest rate reports on March 20 and production data on March 3. These data will impact their interest rate decision on March 21.
However, the UK is expected to keep its policy unchanged. As consumer prices increase slowly, but still above the 2% target, the BoE has not signaled any rush to relax. Switzerland is also expected not to change monetary policy at next week's meeting.
Central Bank of Australia is also forecast to keep interest rates unchanged at 4,35% after January data showed weaker inflation than forecast. Investors will focus on whether the agency will maintain its tightening stance, or will signal loosening in the next few months.
March 22, Central Bank of Russia will have the first policy decision after the Presidential election. This agency is forecast to keep interest rates unchanged for the second consecutive time, at 16%. When inflation is currently 7,7% - nearly double the target, the Central Bank of Russia is unlikely to reduce interest rates in the first half of this year.
Ha Thu (according to Bloomberg, Reuters)
