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Global Market – Focus shift to central banks – US Fed, ECB & BOJ

Global Market – Focus shift to Central banks – US Fed, ECB & BOJ

This week, we will discuss how the focus will shift back to central banks as 3 central banks are schedule to meet this week and take decision on interest rate.  Inflation still remains major concern of all these central banks as they continue to focus on their long-term target on inflation at 2%.  We will discuss what market expectation is from this central bank outcome.

US Fed meeting on 14-Jun-23

• US Fed expected to pause on 14-Jun-23, to take breather after more than a year.
• US Fed chair Jerome Powell signaled after May 2023 US Fed meeting.
• Recent hike in interest rate cycle is the most aggressive rate hike, U.S. Fed has hike rates in every meeting since March 2022.

US fed chair Jerome Powell commentary after meeting outcome will be key event market will be watching out for.  Any comment which will mean that further rate hike could be expected after a pause would be negative.

Bank of Japan meeting on 16-Jun-23

• Bank of Japan may keep interest rate at -0.10%, maintain interest rate at ultra-low rate.
• BOJ to make no tweaks to yield control policy
• Board to maintain forecast of moderate economic recovery
• BOJ may lay groundwork for July upgrade in price forecasts
• Gov Ueda to hold briefing after policy meeting

BOJ may signal robust recovery as robust corporate and house hold spending cushion the blow from slowing oversea demand.  BOJ may also signal that inflation is overshooting its forecast.

Equichain Wealth Advisors: Market View & Opinion

This week focus will shift back to central banks, and market would focus on commentary from US Fed and BOJ.  There is major surprise expectation from ECB as market expectation another hike & temporary pause.

US Fed chair Jerome Powell post meeting press conference will be important as market as already factored in pause from U.S. Fed.  U.S. CPI & Core CPI inflation data are due on 13-Jun-23 and U.S. fed policy outcome on 14-Jun-23.  Comment from BOJ will also be important if there is any change in JGB yield curve or any change in policy would be negative.