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The Federal Reserve is set to reinforce the view that it’s not raising interest rates for a while as policy makers gather this week.
The U.S. central bank is predicted to keep rates steady on Wednesday and potentially change its projections to show it hiking once or not at all in 2019. It will also detail when it will stop reducing its balance sheet and Chairman Jerome Powell will talk to reporters.
“A further downward shift in the Fed’s dot plot will occur, but the median should still reflect at least one rate hike this year,” Bloomberg Economics’ senior U.S. economist Yelena Shulyatyeva said. “Recent remarks from policy makers suggest there could be new information about the balance-sheet unwind, including its size and timing. However, specific details concerning the assets in the portfolio are unlikely to be released at this stage.”
It’s not alone in setting monetary policy this week. Policy makers in the U.K., Brazil, Colombia, Iceland, Switzerland, Philippines, Indonesia, Russia, Thailand and Norway all gather.
None are expected to shift, but most will sound dovish in their outlooks at a time when the world economy is the shakiest since the financial crisis. The outlier is Norway, which is predicted to lift its benchmark for the second time in six months as inflation consolidates above target.
Here’s our weekly rundown of other key economic events:
Powell and fellow policy makers are likely to signal they will stay patient in coming months as the economy slows. That will require a tweak to their so-called dot plot of projections which currently shows two rate hikes this year. Data scheduled for release this week includes purchasing manager indexes for manufacturing and services on Friday.
Europe, Middle East and Africa
Political battles over Brexit will overshadow a bumper week of U.K. economic events. Labor market, inflation and retail sales data will all give a sense of the strength of consumer resilience and demand at a troubled time and the Bank of England meets on Thursday.
In the euro zone, purchasing manager survey numbers on Friday will provide an initial glimpse of the region’s industrial and service-sector health at the end of the first quarter, a well-timed gauge in the aftermath of the European Central Bank’s latest attempt to bolster economic growth amid nagging fears of a deepening slowdown. Russia’s central bank is expected to hold interest rates steady when it meets on Friday, but may signal easing could start sooner than previously expected. In South Africa, data is forecast to show inflation accelerating.
Central banks in Thailand, the Philippines and Indonesia are all scheduled for policy meetings. The Fed pause and resulting let-off in pressures facing emerging market currencies has changed the conversation, with attention now swinging to which authorities have room to ease policy. Australia will release jobs numbers for February -- any weakness there would add to swelling bets that the next move for the RBA will be a rate cut.
Investors will stay focused on developments in the U.S.-China trade war and some will cast their eye to Japan and the burgeoning debate over whether its central bank should change its inflation target.
While Brazil’s Jair Bolsonaro makes his first presidential visit to the U.S., the Brazilian central bank holds its first monetary policy meeting under new chief Roberto Campos Neto. It is widely expected to hold its benchmark at an all-time low on Wednesday, but investors will be watching for any signs of additional rate cuts following a series of disappointing economic data. On Thursday, the popularity of Argentinian President Mauricio Macri may suffer another blow as fourth-quarter gross domestic product and unemployment data are poised to show the economy further sinking into recession. On Friday, Colombia’s central bank is expected to keep its key rate at 4.25 percent as subdued inflation supports the case for delaying monetary tightening. Canada’s government releases its budget on Tuesday.
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