This week, eyes at the central banks of giant economies: What are the expectations?

Markets begin a critical week in which high volatility can be experienced. In particular, the interest decisions and statements of the central banks of the USA, Europe and Japan are at the focus of investors.

Expectation of the market from the Central Bank of the USA

The US Federal Bank (FED) draws attention with its monetary policy decisions on Wednesday and the verbal guidance of the FED President Jerome Powell after the meeting. In the money markets, the Fed’s policy rate increases by 25 basis points, but it is foreseen that the policy interest will be fixed at the meeting on September 20. According to CME Group’s Fedwatch data, the probability of leaving the Fed’s interest rates on September 20 was priced at 83.9 percent, while the probability of increasing interest rates by one 25 basis is priced at 16 percent. Nevertheless, it is possible to say that the expectations may change for the September 20 meeting following the interest decision of the Fed on Wednesday. Analysts say that despite the slowdown in inflation in the United States, signals from the labor market have created uncertainty about interest rate hikes. It is thought that the FED may end interest rate hikes after this meeting, taking into account the risk of recession in the USA.

Expectation of the market from the Central Bank of the USA

In Europe, the Monetary Policy decisions of the European Central Bank (ECB) will be announced on Thursday. Inflation pressure in Europe continues to remain stronger than the US, and in the money markets, the ECB will raise an interest rate of 25 basis points at this month’s meeting. The bank is expected to increase a total interest rate of 50 basis points by the end of the year.

In Asia, the interest rate decision of the Central Bank of Japan (Boj) is the focus of investors on the first day of the week. In June, annual inflation is 3.3 percent of Boj’s target of 2 percent. Although Boj is not expected to make changes in monetary policy, there are expectations that he can make adjustments in politics at the meeting on Friday.