Central banks are taking center stage this week

As the US and Israel's conflict with Iran enters its third week, heightened geopolitical tensions may continue to drive volatility in global markets. Alongside these risks, the primary focus this week is on the interest rate decisions of major global central banks. The central bank's decisions will be crucial for educating markets about future direction, as the discussion on policy is likely to influence market volatility.

7 major central banks meet this week

Another busy central bank week is upon us, with the Federal Reserve, Bank of Canada, Reserve Bank of Australia, European Central Bank, Bank of England, Swiss National Bank, and Bank of Japan grabbing the spotlight. The Fed and BOJ meetings will probably draw the most attention, but the RBA meeting could also produce a significant impact. The Reserve Bank of Australia (RBA) will kick off a week of central bank decisions on Tuesday. The RBA is expected to raise interest rates again in response to rising inflationary pressures caused by oil prices.

FOMC decision lands on Wednesday

The FOMC will announce its interest rate decision on Wednesday, followed by a press conference with Chairman Jerome Powell. Markets broadly expect the US central bank to hold interest rates unchanged, but the meeting could provide more information about the timing of future rate decreases. CME Fedwatch forecasts a 98.1% chance that the Fed will keep interest rates steady on March 18th. Despite anticipated pricing pressures from rising global uncertainties, this possibility is based on recent inflation data and signs of a cooling labor market. Therefore, the main attention will be on Fed Chair Powell's speech for indications regarding potential future rate cuts or whether the Fed will decide to pause.

The Bank of Canada will be another major central bank to update its policy on Wednesday. On Thursday, rate decisions will follow from the BOJ, BOE, SNB, and ECB. The Bank of Japan (BOJ) is anticipated to maintain its current borrowing costs this week as well. However, traders will be paying close attention to any indications that it may accelerate its rate hikes.

 

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