Weekly reviews

Review of the key events of the upcoming week 15.03 - 21.03


Major events of the upcoming week

All market attention is still focused on changes in the yield of US government bonds. February CPI data released last week eased market expectations about a possible increase in inflationary pressures in the US in the medium term. But for many, it remains obvious that against the background of large-scale measures of fiscal stimulation of the economy and the Fed's soft policy, an acceleration in the growth rate of the consumer price index is inevitable. Inflation could exceed the target range set by the Fed, which could trigger an earlier rollback of the Fed's stimulus program. A similar market situation was already observed in 2013. Then the regulator has repeatedly stated that the growth of government bond yields is not a problem for the economy, but, after a while, began to reduce the volume of the QE program.

Most likely, at the upcoming FOMC meeting, the topic of growth in Treasury yields will be one of the main ones. Earlier, the Fed stated that the current growth in profitability is not a problem for the economy, but reflects more optimistic expectations of the market regarding the prospects for the development of the American economy. Also at the upcoming meeting, the Fed is to present new rate forecasts.


USA - FOMC Meeting

The upcoming Fed meeting is of little interest in terms of possible changes in monetary policy. The regulator has made it clear that in the long term, interest rates will be kept at current levels. The scope of the asset repurchase program is also likely to remain unchanged. The main focus of traders will be on the final press conference of the Fed, as well as new long-term forecasts for rates.


UK - Bank of England meeting

During the last meeting, the regulator made it clear that in the near future it does not intend to make adjustments to the main parameters of monetary policy, dispelling all speculation about a possible decrease in interest rates. Obviously, no big surprises should be expected from the meeting of the Bank of England on March 18. The regulator with almost 100% probability will keep the rate at 0.10%, and the volume of the asset repurchase program at 875 billion pounds.



Japan - Bank of Japan meeting

The market has long been very weak in responding to the meeting of the Bank of Japan, since the regulator has been consistently implementing a very soft monetary policy for a long period of time. In the context of the economic crisis, the regulator has a very limited set of response tools. There are no reasons for changes in the main parameters of monetary policy yet. With a probability close to 100%, the regulator will keep the interest rate at the level of -0.10%.