Weekly Analysis (18 - 22 March)

The Federal Reserve is anticipated to hold interest rates steady in its upcoming meeting, marking a consistent approach for the fifth time amidst signs of a robust labor market and easing inflation. Attention will be on the FOMC's economic projections and 'dot plot' for hints on future rate movements, especially in light of recent CPI and PPI figures that have tempered expectations for cuts. The March PMI survey is expected to show a modest slowdown in manufacturing growth since the peak in February and a slight deceleration in service sector growth for the second month. Housing starts are projected to recover, while existing home sales may see a slight decline.
In the UK, the Bank of England is likely to maintain its rate at 5.25%, with a cut anticipated in August amid slowing inflation to the lowest since September 2021. Data on PMIs, consumer confidence, and other economic indicators are awaited. Switzerland and Eurozone central banks are also making key rate decisions, with the latter's consumer confidence expected to be at its highest since early 2022. Economic sentiment in Germany is forecasted to improve, reflecting a positive outlook.
Asia sees Japan potentially ending its negative interest rate policy due to substantial wage increases, while economic data will be keenly observed across the region. The People's Bank of China is expected to keep its loan prime rates unchanged, with economic indicators suggesting a mixed picture of China's economic health. Australia's Reserve Bank is poised to hold rates, with labor data and PMIs to provide further economic insights.
Overall, global central banks are navigating through complex economic landscapes, with a mix of cautious optimism and readiness to adjust policies as necessary, reflected in their upcoming decisions and data releases.