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Investors will focus on central bank decisions this week to determine how close the Federal Reserve is to reducing rates. After months of anticipation, the Bank of Japan may exit negative interest rates. A much awaited developer conference is scheduled for AI darling Nvidia (NASDAQ:NVDA). Start your week with these tips.
Federal Reserve meeting
Last week’s hotter-than-expected U.S. producer and consumer pricing data caused traders to reduce Fed reduction bets.
All eyes are on Wednesday’s Fed meeting for indications on rate decreases, the U.S. economy’s durability, and an inflationary return.
Fed Chair Jerome Powell said this month that officials have “gained greater confidence that inflation is moving sustainably” toward the central bank’s 2% objective, but they want more signs of a slowdown before reducing.
“We think the Fed is still likely to ease at mid-year (June or July), but the FOMC meeting will keep us squarely in the wait-and-see period by another one or two meeting cycles, with Jay Powell repeating that he needs a “little bit more” evidence that disinflation is sustainable before cutting the Fed Funds rate target,” Macquarie analysts wrote.
BOJ
Tuesday’s BOJ meeting might be one of the most important in years as policymakers decide whether to stop eight years of zero interest rates and move away from its massive stimulus program.
The BOJ is poised to discontinue its zero interest rate policy this week after Japan’s leading corporations agreed with labor unions to boost pay by the most in 33 years in annual salary discussions, according to Nikkei Saturday.
The article stated the BOJ initiated internal and external coordination Friday to discontinue its negative interest rate policy.
With negative rates largely eliminated, the market is focused on the BOJ’s guidance on future interest rate rises.
The Bank of England
The BoE may delay Thursday’s rate decision until wage growth, which is stronger than in the U.S. or euro zone, is clarified.
After the Fed and ECB, markets anticipate the BoE to decrease borrowing prices from 5.25%, the highest since 2008, in August.
Investors will watch for any change in rhetoric about placing the BoE’s Bank Rate “under review” and any vote movement following February’s three-way split. Wednesday’s inflation figure may prompt a last-minute reconsideration.
Nvidia developer event
AI-related announcements at the Nvidia GTC developer conference on Monday will be carefully monitored by investors hoping to maintain its stock rise.
CEO Jensen Huang will give the keynote talk and may reveal its latest products, including the B100 GPU for AI and high-performance computing.
Since a record high close on March 7, Nvidia’s stock has fluctuated, but its year-to-date gains have added $1 trillion to its market worth, making it the top-performing S&P 500 stock.
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“We think the Fed is still likely to ease at mid-year (June or July), but the FOMC meeting will keep us squarely in the wait-and-see period by another one or two meeting cycles, with Jay Powell repeating that he needs a “little bit more” evidence that disinflation is sustainable before cutting the Fed Funds rate target,” Macquarie analysts wrote.
Investors await Tuesday’s U.S. inflation data to gauge Fed interest rate cuts, with February’s consumer price index expected to rise 0.4% after a faster increase of 0.3% in January.
Fed Chair Jerome Powell indicated that a rate cut may be appropriate this year, but he and his team are not yet prepared. Market observers will also be examining February’s retail sales data, which is expected to rebound 0.8% after a similar decrease a month earlier.
The economic calendar also features updates on industrial production, consumer sentiment and weekly data on initial jobless claims.
Fed officials will be entering the traditional blackout period ahead of their upcoming meeting next week.
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