The US federal reverse, european central bank of england are all expected to hike interest rates once again this week, as they make their first policy announcements of 2023.
Economists will be watching policymakers’ rhetoric closely for clues on the path of future rate hikes this year, as the three major central banks try to engineer a soft landing for their respective economies without allowing inflation to regain momentum.
All three banks are expected to re-emphasize commitments to returning inflation toward targets near 2%, but recent positive data have fueled hopes that central banks will eventually be able to slow the pace of rate hikes.
Nick Chatters, fixed income manager at Aegon Asset Management, said that the task for market watchers is to “telegraphically infer” from this week’s press conferences what Fed Chairman Jerome Powell and ECB President Christine Lagarde are thinking about the “terminal rate,” and how long they intend to keep monetary policy restrictive before starting to normalize.
The Federal Open Market Committee concludes its meeting on Wednesday, before the Bank of England and ECB deliver their decisions on Thursday.