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Morning Bid: Three meetings down, bring on the rest

Published 21/03/2024, 05:35
© Reuters. FILE PHOTO: The Bank of England is seen in the City of London, Britain, July 30, 2023. REUTERS/Hollie Adams/File Photo
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A look at the day ahead in European and global markets from Tom Westbrook

Central bank meetings in Sydney, Washington and Tokyo concluded this week with, respectively, few surprises, little changed and a total but expected revolution in policy.

Next up are Norges Bank, the Bank of England and the Swiss National Bank, of which the latter is perhaps the most likely purveyor of surprise given the strength of the franc.

On the sidelines of the World Economic Forum in Davos, SNB chief Thomas Jordan told the Swiss press that the franc's appreciation was posing challenges for exporters.

Analysis from the St Louis Fed shows the franc's broad effective exchange rate is the highest in at least 30 years. Markets price about a one-third chance of a rate cut, meaning it would likely trigger a noteworthy reaction if it happened.

In Britain, inflation slowed in February and undershot forecasts, including those from the BoE. That might be enough of a signal that things are heading in the right direction to settle the two hawks who voted for a hike last month.

Meanwhile investors were cheering the Fed's decision to stick with projections for three rate cuts this year. Rates were held steady, as expected, though price pressures persist.

Wall Street stock indexes strode to record highs, gold prices spiked to a record in early Asia trade and equity benchmarks in Tokyo and Taipei made record peaks.

The yen bounced and blowout job numbers in Australia rallied the Aussie.

Beneath the hood of the Fed's projections, National Australia Bank's Taylor Nugent noted long-term rate expectations are creeping higher. The median long-term rate projection nudged from 2.5% to 2.6%. But there are now seven policymakers with a long-run projection of 3% or above, up from four in December.

Turkey's central bank also holds a policy meeting on Thursday. It is expected to keep rates steady ... at 45%.

Key developments that could influence markets on Thursday:

© Reuters. FILE PHOTO: The Bank of England is seen in the City of London, Britain, July 30, 2023. REUTERS/Hollie Adams/File Photo

Policy: Norges Bank, BoE and SNB meetings

Earnings: BMW

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