UNITED STATES (VOP TODAY NEWS) — This week, the most important event for market players will be the Fed meeting. Analysts predict that the US central bank will keep the current interest rate, but investors will closely monitor how restrained the US central bank will be regarding the next interest rate increase.
Earlier, US central bank officials predicted two interest rate hikes in 2019. However, the recent weak US economic reports amid fears of a continuing trade conflict between the US and China have caused rumors that the Fed may suspend an increase in interest rates this year.
British Prime Minister Theresa May will once again try to get approval from Parliament for the agreement proposed by her regarding the conditions for secession from the European Union. The unpopular agreement was twice rejected by the overwhelming majority of parliamentarians, but now there are prospects for a long postponement of the Brexit, or even another referendum that could lead to its cancellation. Such perspectives may force the European skeptic conservatives to go over to May.
Also in the economic calendar of the next week there is a report of the Bank of England, although it is very unlikely that he will rock the boat of cautious monetary policy amid uncertainty about Brexit.
Next week there will also be results of surveys on business activity in the manufacturing sector and the eurozone services sector. They will give new information about the situation in the European economy at the end of the first quarter, as well as how it reacts to trade conflicts and difficult negotiations on Brexit.
1. Decision on the interest rate
According to analysts, the Fed will keep the interest rate as a result of its two-day meeting. The decision of the Fed will be announced at 21:00 MSK Wednesday. Most likely, the range of the federal funds rate will remain at 2.25-2.5%.
Half an hour after the publication of the Fed statement, Jerome Powell will hold a press conference that will attract the close attention of market players.
The US Central Bank will publish new forecasts for the country’s economic growth and the interest rate. The latter forecast is also known as a dot plot plot. It will make it possible to understand whether Fed officials are planning at least one interest rate increase before the end of this year.
In addition, according to analysts, the Fed will announce details about its plans to complete the balance sheet cuts.
2. Production activity from the Philadelphia Fed
US economic data will remain in the spotlight after a series of weak reports. The focus will attract a report on manufacturing activity in Philadelphia .
It will be published at 15:30 Moscow time on Thursday. According to analysts, the value of this index in March will be 6.1. In February, the value of this index dropped sharply to negative for the first time since March 2016, dropping to –4.1.
Investors will pay particular attention to this report after a similar report on business activity in the manufacturing sector in the state of New York last week recorded a decline to a minimum since May 2017, which was another indication of a sharp slowdown in economic growth in the first quarter.
Also on Friday, there are data on business activity in the manufacturing sector and the US service sector. On Thursday, a report will be published on the sales of homes on the secondary housing market of the United States.
3. Another vote on the project Brexit
British Prime Minister Theresa May warned lawmakers at the weekend that the refusal to approve her proposed version of the Brexit agreement would mean a prolonged delay.
The proposed Mei version of the agreement provides for the maintenance of close ties with the European Union, although at the time of leaving the official structures of this organization. In the voting on January 15, he was rejected by the Parliament of Great Britain with a difference of 230 votes, and in the voting on March 12, with a difference of 149 votes.
However, May continues to struggle to get support for her plan. According to analysts, she will offer to hold the third vote on this plan next week, most likely on Tuesday.
In order to get the approval of the Brexit plan in parliament, the prime minister must be convinced by dozens of ardent Brexit supporters from his own Conservative Party, as well as from the Democratic Unionist Party of Northern Ireland, which supports the minority government of May.
After two years of extremely difficult negotiations with the EU, the final result remains uncertain. Possible options include a prolonged postponement of Brexit, secession from the EU in accordance with the May Agreement, a “hard” exit without concluding any agreement, and even holding a second referendum.
4. Decision of the Bank of England
Analysts predict that at 15:00 Moscow time, the head of the Bank of England Mark Carney and members of the Monetary Policy Committee will keep the Bank of England interest rate at 0.75% .
Economists predict that members of the Monetary Policy Committee of the Bank of England will unanimously vote for the current interest rate.
Market players will also pay attention to employment data in the UK, as well as to new inflation data and retail sales, in order to obtain new information on the state of the British economy.
In February, UK economic growth slowed again to almost nil, amid concerns about Brexit and the slowdown in global economic growth.
5. New indices of business activity in the Eurozone
At 12:00 pm Moscow time, the IHS Markit research group will publish a composite PMI index in the eurozone . According to analysts, this index will slightly increase to 52.0 .
This index measures the performance in the manufacturing and services sectors and is therefore considered a good indicator of the situation in the economy as a whole.
Prior to this, there will be PMI indices for France and Germany at 11:15 and 11:30 MSK, respectively.
Earlier this month, the European Central Bank postponed, at least for 2020, the period of the first interest rate increase after the global financial crisis. In addition, the ECB has proposed a new program for providing cheap loans to banks to support the eurozone economy.
This article is written and prepared by our foreign editors writing for VOP from different countries around the world – edited and published by VOP staff in our newsroom.
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