FOMC and the BoJ will take centre stage this week – Danske Bank

Research Team at Danske Bank, suggests that we are in for a quiet start to an eventful week where the FOMC and the BoJ monetary policy meetings on Wednesday will take centre stage.    

Key Quotes 

“In our view, the Fed will not raise the federal funds target range this year, in light of sluggish growth and continued labour market slack. We expect Markit manufacturing PMI (deu on Friday) to confirm this picture.

In Japan, all eyes to be on the comprehensive assessment due to be conducted by the Bank of Japan (BoJ) for any indications of a change in the monetary policy framework and/or additional monetary easing. We do not expect the BoJ to ease monetary policy as such. However, we expect it to adjust its policy framework by abandoning calendar-based communications on when it expects to reach the 2% target and instead pursue 2% inflation 'at the earliest possible stage'. We expect the BoJ to maintain its negative interest rate policy and keep the door open for additional rate cuts in the future. In addition, we expect the BoJ to adopt a more flexible approach with its quantitative target for annual increases in the balance of JGB purchases.”