What to Watch For This Week

  • Fed Meeting

In the last Fed meeting of the year, scheduled for Tuesday and Wednesday, Chairman Jerome Powell and his colleagues are expected to discuss an accelerated end to the central bank’s $120 billion-a-month bond-buying program.

Investors will be watching for signs that the Fed will change interest rates soon. Data Friday showed consumer prices rose last month at the fastest pace in nearly four decades. That strengthens expectations for higher interest rates.

  • BoE, ECB Decision

The BoE and the ECB will announce what will probably be their last monetary policy decisions for the year on Thursday.

The ECB is expected to announce that the €1.85 trillion PEPP pandemic program will end in March. But as the pandemic is still ongoing with ever new variants, this may change.

  • U.S. Economic Data

The United States will release data on producer price inflation on Tuesday. Retail sales figures are expected on Wednesday. Industrial production data and initial jobless claims will follow on Thursday.

  • Market Volatility

U.S. equity markets returned to record highs after a sell-off caused by concerns over the Omicron variant and a move toward faster tapering.

Uncertainty about future monetary policy and rapidly rising inflation leaves investors in the dark at the moment. Negative news could lead to renewed sell-offs, which can lead to high market volatility.

  • Bank of Japan

The BoJ will hold its monetary policy meeting on Friday and appears to be maintaining its very loose monetary policy. Instead, it is debating whether to extend the pandemic relief program beyond the currently planned end date in March 2022. Since the BoJ is basically the inventor of QE, a renewed cash injection does not seem unfamiliar.

Other Things to Watch

Turkey’s central bank will meet on Thursday to decide whether to cut interest rates further and weaken the lira further.

The central banks of Switzerland, Russia, and Hungary are also meeting this week.

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