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FOMC, SNB And BoE Meetings

18 March 2019

A busy week for the financial markets is coming up.  Here’s a quick recap of the market-moving events we can expect.

Central Banks

The week ahead will see the US Federal Reserve and the Bank of England holding their respective monetary policy meetings. Both are expected to leave interest rates unchanged.

The Swiss National Bank is also due to hold its quarterly monetary policy meeting this week. We expect no changes here either, as the SNB will be maintaining the 3-month LIBOR rate at -0.75%.

Brexit & The Eurozone

Given that the UK parliament voted down PM May’s Brexit deal once again, the uncertainty continues. This could see the BoE focusing more on the Brexit outcome rather than monetary policy at the moment.

Meanwhile, Flash services and manufacturing PMI reports will be coming out from the eurozone. These will give us a glimpse into the business activity for the month of March.

New Zealand Growth

The fourth quarter GDP report from New Zealand will be coming out this Wednesday during the overnight trading session. Expectations show that the quarterly GDP growth rate was around 0.3%during the three months ending December 2018. The data is expected to show a slowdown in New Zealand’s economy through 2019 despite some temporary factors such as the energy sector.

The slower pace of growth for the country stands in contrast to the Reserve Bank of New Zealand’sforecast of a 0.8% increase. The RBNZ estimated this figure during the February monetary policy report.

In the September quarter, New Zealand’s GDP advanced 0.3%. On an annualized basis, New Zealand’s GDP for 2019 is expected to slow to a pace of 2.7% compared to 3.1% during the third quarter of 2018.

Besides the GDP data, the fourth quarter current account deficit report will be coming out a day earlier on Wednesday. Economists forecast that the current account deficit will widen to about 3.9% of the GDP, marking a six-year high. This comes amid lower terms of trade and higher import volumes.

FOMC Preview

The U.S. Federal Reserve bank will be concluding its two-day monetary policy meeting on Wednesday.The central bank will be releasing its monetary policy statement along with economic projections and the FOMC’s dot plot on interest rates. The Fed Chair, Jerome Powell will also be holding a press conference later in the day.

Expectations point to the fact that the Federal Reserve will be keeping interest rates unchanged at this week’s meeting. The Fed funds rate currently stands at 2.50% – 2.25%. The central bank last hiked rates in December 2018 and the March meeting will mark a full quarter where interest rates were not changed.

The decision to leave interest rates as they are comes as the latest data showed that consumer prices eased.

Headline inflation as of February slowed to a pace of 1.5% from 1.6% on an annualized basis. Core inflation was also eased to a pace of 2.1% from 2.2% previously during the same period.

Meanwhile, economic reports point to the fact that the US economy grew at a much slower pace compared to the fourth quarter of last year. According to the initial estimates, the US GDP advanced 2.6%during the three months ending December 2018.

However, data shows that this could be revised lower. The first quarter GDP expectations are at below 2.0% which would mark a slower pace of increase. As a result, Fed officials are likely to remain very cautious on forward guidance. Most likely, they’ll state that rate hikes will be data dependent.

Adding to the Fed’s woes, the February jobs report showed that the U.S. economy added only 20,000 jobs during the month. This marked one of the slowest pace of job gains in recent years.

Despite wages rising and unemployment falling, the weaker pace of job gains has dented sentiment. As a result, investors will be looking to forward guidance and the Fed’s projections on the economy.
Back in December, the Fed signaled two rate hikes in 2019, which will be closely watched for any changes to these projections.


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