The week ahead (12 – 16 June): Central Banks on top of events

11 Jun 2017 04:30 PM

After a week full of major events, this week comes with a lot of data and events. More than one central bank will be meeting this week to decide on interest rates, but most of the attention will be directed towards the FOMC with the possibility of a rate hike during this meeting. Next to these meetings will be some important economic data that will also play a role in market movements.

Federal Reserve Committee Meeting (FOMC) / US Inflation Data

FED is expected to raise interest rates for the second time this year, four times this year is expected, by a quarter basis point to 1.25%. Next to the interest rate decision will be the Economic Projections and interest rate outlook for the Federal Reserve. There will be a press conference for Janet Yellen, the US Federal Reserve Governor, where the markets will wait her views on the US economy and the future of interest rates. Another important issue to be considered is the Fed's plan to cut its balance sheet later this year.
As well as the release of US inflation data, which disappointed markets the last time, as it is expected to stabilize in the same range of last month as the CPI is expected to rise in May by 0.2%.

British Interest Rate Decision / British Inflation Data

BOE will announce its interest rate decision after its meeting on Thursday, with most expectations suggesting that it will keep its policy unchanged and keep interest rates at 0.25%, but it may take a cautious tone following the failure of either party to win the majority during the general election that held last week. the bank had earlier indicated that monetary policy could remain unchanged until the end of the year.
Also, attention will be focused on inflation data in Britain, which may put pressure on the BOE to raise interest rates if it continues to rise, as it is expected for CPI to rise in May by 2.7%. Retail sales data and labor market data will also be released.

Monetary policy decision of the Bank of Japan

BOJ is expected to keep its monetary policy unchanged at a meeting to be held early on Friday morning considering the economy's growth at a moderate pace despite weak inflation and consumer spending figures. With the Bank of Japan's current policy of controlling the yield curve, negative interest rates remain at -0.10%, the 10-year government bond yield stabilizes near zero levels, and the bank is expected to keep buying government bonds at 80 trillion yen annually.

Monetary policy decision of the Swiss National Bank

SNB will hold its meeting on Thursday and it is widely expected that its policy will remain unchanged and that interest rates will remain at -0.75%, with its intention to intervene in the currency market when necessary as Swiss franc is overvalued.

Growth data for the New Zealand economy

GDP data for the first quarter of 2017 will be released and the economy is expected to grow by 0.7%, following its 0.4% growth in the fourth quarter of last year.

Australian Employment Data

The economy added 37.4K jobs in April to capture the good job data for the last six months. The economy is expected to continue adding jobs by 9.7K in May and unemployment to stabilize at 5.7%.

Chinese Industrial Production

Industrial production is expected to continue to slow in May, by rising only 6.4%, after rising 6.5% in April, it is a key indicator of the strength of the Chinese economy.

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