Key central banks’ decision ahead: FOMC & BOE - Natixis

Analysts at Natixis offer a sneak peak on the upcoming global central banks’ policy decisions in the week ahead, as the BOJ decision is now behind us.

Key Quotes:

“In the US, the Federal Open Mart Committee (FOMC) meets on Wednesday. No change is expected in the trajectory of the Federal Reserve’s monetary policy.”

“As regards the fundamentals, the latest data was at best mixed, but even so the economy has reached full employment, with pressures on wages already in evidence in certain sectors, notably those employing not highly qualified labour.”

“The main determinant of the Federal Reserve’s monetary policy in coming months will be the economic policy of the new administration.”

“The Bank of England’s Monetary Policy Committee (MPC) will meet on Thursday, when it is likely to maintain the status quo when it comes to its monetary policy.”

“The central bank can therefore be expected to maintain in place its Asset Purchase Facility (£435bn of Gilt purchases, £10bn of corporate bond purchases targeted) and to keep on hold the bank rate at 0.25%.”

“At first sight, one might wonder why the Bank of England continues to pursue such an accommodating monetary policy.”

“For one thing, economic growth is robust, more so than in most OECD countries in 2016 despite the outcome of the 23 June referendum.”

“In addition, PMI remain upbeat, the employment rate is only 4.8%, while wage growth is tending to pick up, reaching 2.8% in November, up from around 2% at the start of 2016.”