Central bank week

All major central banks and even the Bank of Russia or the Bank of Turkey are meeting this week. The Bank of Turkey is expected to distinguish itself again by lowering interest rates, while the currency continues to weaken and inflation to strengthen. The decisions of the ECB and the BoE are uncertain, as the resurgence of the pandemic has negative consequences on short-term activity. The Fed’s decision is in little doubt after the US inflation rate soared to 6.8% yoy in November, while core inflation reached 4.9%. The only positive element was that the figures did not exceed expectations, but otherwise it was still possible to argue that the slippage was temporary in June, when price increases specifically related to the reopening of the economy accounted for half of the increase. Today, this contribution has been halved, largely outweighed by potentially structural factors.

The Fed is expected to announce a sharp acceleration in the pace of its asset purchases and a halt to them by the end of the first quarter, which would open the door to a rate hike in May or June.

Deterioration of the business outlook in services according to the Bank of Japan’s latest Tankan: some of the answers were given after the appearance of the Omicron variant, which probably explains this. The economic calendar is otherwise empty today. Little change in the interest rate and foreign exchange markets.