Next week will have traders preoccupied with more central bank action. On Wednesday, the Federal Reserve will reconvene for their first meeting of 2016. Although few expect the Fed to raise interest rates, we may hear more details about the Fed’s economic outlook and the pace at which they plan on raising rates. Recall that the Fed promised a string of interest rate hikes this year, but with worsening economic conditions and the recent global equity fallout perhaps we will hear Yellen announce a different path for US monetary policy.
After the Fed, the Reserve Bank of New Zealand is on tap. Many expect the RBNZ to cut rates after a series of disappointing data.
On Friday, keep your eyes peeled on the Bank of Japan rate decision. There is now a 30-40% chance that the BoJ may cut rates. Although the markets are expecting rates to remain unchanged, BoJ Governor Kuroda is known to pull surprises.
Other events to look out for include Bank of England Governer Mark Carney’s speech. The BoE decision passed recently without any major changes and it is unlikely we’ll hear anything new from Carney. Expect the same rehashed statements concerning UK and global monetary policy.
Friday is a more important day with some vital data in the form of Consumer Price Index for the Eurozone and US Gross Domestic Product for the 4th quarter of 2015. Markets are expecting the CPI to rise slightly higher to 0.4% from 0.2%. As for US GDP, expectations are for a 0.8% rise from last year. If GDP comes in lower, this would shame the Fed as many experts did not believe the Fed should have raised rates in December.
Guest post by Donald Levit, strategist for www.EconomicCalendar.com
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