Investors face a week full of important decisions from central banks. For example, the US Federal Reserve and the Bank of Japan are making decisions on interest rates. In total, there are decisions on the cost of borrowing for six of the world’s 10 most traded currencies.
The Bank of Japan will announce its decision on Tuesday. The big question is whether policymakers will raise their key interest rate, which is currently negative, in March. The hike would mark a shift after decades of Japan’s primary focus on boosting inflation through low interest rates and bond purchases. But experts also take into account that the BOJ won’t make its first rate hike until April.
Elsewhere in the world, investors are mainly hoping for clues on the first rate cuts. This will be a major focus, especially with regard to the interest rate decision of the US Federal Reserve. After raising interest rates quickly to stem high inflation, the central bank umbrella organization decided not to raise interest rates after July last year.
What does the Fed do?
As the year ended, stock markets were increasingly hopeful that interest rates would soon be cut, which would be good for stock valuations. That expectation played a big role in the euphoric mood on Wall Street, where records were broken and the broad S&P 500 index rose nearly 8 percent since the start of the year.
But the U.S. economy continues to perform remarkably well, which could give the Fed room to keep interest rates higher for longer. Meanwhile, Fed Chairman Jerome Powell recently told Congress that confidence in favorable inflation developments is almost high enough to start cutting rates.
Also quarterly figures
Central banks will announce their interest rate decisions not only in the US and Japan, but also in the UK, Switzerland, Norway and Australia, among others. In addition to all the monetary decisions, next week will also be the focus of attention on the quarterly figures of a number of major companies. The results of the sportswear brand Nike may show whether consumers are buying clothes again. The major parcel delivery company FedEx will also announce its earnings and sales figures.
