Central Banks in the spotlight!
We will have a great and heavy week with the Central banks meeting in focus. Central banks in the US, UK, Swiss, Japan, and Eurozone will have monetary policy meetings and interest rate decisions. On the other hand, we should not forget about the Omicron variant of coronavirus, because while some countries are careless, there are other countries like the UK that started some restrictions, therefore we have to follow its news as well. And do not forget about IFC Markets surprise at the end!
China Retail Sales & Industrial production - Wednesday
We could see some weak signals in the past months from the Chinese economy, which ended with just a 0.2% increase in Chinese GDP in the third quarter, compared with the second. However, now we have improvement signs. Last week we had Chinese trade data with great development in both imports and export numbers. Therefore expecting to see higher numbers in both consumer front with more retail sales and production front with increasing industrial data are in line with the economic outlook and recent decisions from People Bank of China.
FOMC Meeting - Wednesday
The FOMC's last meeting and Interest Rate Decision of 2021 will be held on Tuesday and Wednesday. December 15th we will have the FOMC announcement with FED chair Mr. Powell's press conference. While we are not expecting to see any changes in the current fed funds target range of 0.0%-0.25%, however, with the latest great numbers from the Labor market and 6.8% inflation, ending the bond-buying program a bit sooner, is widely expected. Also, we have to follow the meeting’s dot plot to see when they are planning to increase the rates. Any Hawkish policy and decision can put the stock markets under pressure and vice-versa.
ECB Meeting - Thursday
Despite the latest concerns about Omicron, the economic outlook did not change, therefore ending the PEPP program in the first quarter and at the end of March next year also, not going to see any changes. Also, with ECB council members' comments about economic conditions, we are not expecting to see any changes in the interest rates levels as well. Therefore the main focus in the meeting will be about the fate of ECB's APP program after ending the Pandemic Emergency Purchase Program. Expected policies will not be in favor of the Euro and will put it under pressure against its crosses.
BoE meeting - Thursday
Bank of England also will hold its Interest Rate Decision and monetary policy meeting this week on Thursday. We are waiting for a little bit more Hawkish tone in the Statement, and voting results at Monetary Policy Committee meeting. With increasing inflation and its expectations in the UK, now we can see more pressure on BoE also to make a bit stricter decisions. Until last week that UK government announced new rounds of restrictions, rate hikes also could be expected, but now more probably it will happen in 2022. GB100 with these expected policies can be a bit under pressure in the short term.
BoJ meeting - Friday
Bank of Japan will be the latest major bank that will have the Interest Rate Decision and monetary policy meeting this week. Among the central banks, the Bank of Japan is the only one, which does not have the two main issues that others have, Inflation concerns and Cash shortage. The Japanese economy has been suffering from negative and low inflation for years, even now, it is still under BoJ's targets. On the other hand, with the country's strong economy and reserves, they do not have supply problems as well. Regarding all these, still we are expecting to have low-interest rates and more stimulus plans. Nikkei 225 will be the main winner of this policy.
