Global Central Banks confront enthusiasm of investors: Eco Week

15 March, 2021 12:00 AM printer

NEW YORK: Central bankers from Washington to Tokyo will this week confront the enthusiasm of investors betting on a return of inflation, delivering policy responses ranging from cautious tolerance to interest-rate increases.

For many such officials, the three-day frenzy of meetings starting on Wednesday is the first scheduled opportunity to act since a global rout in government debt markets took hold in February, fueled by speculation of a pickup in prices after the coronavirus crisis abates, report agencies.

The U.S. Federal Reserve’s decision will be the most significant among at least 11 monetary announcements due around the world. Chairman Jerome Powell is likely to affirm a loose stance that stops short of the heightened activism of the European Central Bank, which last week pledged to frontload bond purchases.

The Bank of England might take a view similar to the Fed’s as it focuses on growth risks still dominating the outlook. The Bank of Japan will unveil a policy review, possibly tweaking stimulus programs and even maybe reiterating its capacity to cut rates further.

Other monetary authorities are likely to be less sanguine. Central banks in Norway and Russia may signal shifts to a more hawkish stance, while officials Brazil and Turkey could deliver the Group of 20’s first rate hikes of 2021.

“Central banks went into the Covid crisis together. They will exit separately. For the Fed and Bank of England, slightly higher yields can be tolerated as an early sign of recovery. For Brazil, they contribute to a more challenging environment that’s likely to force a rate hike—despite a raging virus and risks to growth.”

Elsewhere, ECB President Christine Lagarde speaks to European Union lawmakers and and China gets its first set of hard data this year.

Click here for what happened last week and below is our wrap of what is coming up in the global economy.

The Federal Open Market Committee, holding its second meeting of the year March 16-17, is almost certain to keep interest rates near zero and pledge to continue its asset purchases at the current pace. Wall Street economists’ focus will be on the central bank’s quarterly forecasts, including whether the panel includes an initial rate hike in the 2023 projections, in response to a pickup in the outlook for growth.