A Sneak Peek At the 4 Rate Decisions Scheduled This Week

RBA Rate Decision

We kick things off on Tuesday, April 2, at 12:00 am GMT.

In its last rate statement, the RBA left rates unchanged at 3.00%. RBA Governor Glenn Stevens also reiterated the bank’s dovish stance, saying that inflation still has room to accommodate further easing.

Going into this week’s statement, market analysts think that interest rates will still be held steady at 3.00%. However, some argue that we would hear RBA Governor Glenn Stevens sound more optimistic given the recent improvements in the Australian economy, particularly in the labor market.

If you remember, the employment change report for February came in at 71,500 versus the 10,000 consensus and the unemployment rate improved by 0.1% to 5.4%.

Be careful not to get too excited though. A few naysayers think that the RBA won’t completely drop its dovish stance about it being ready to cut rates when necessary. Heck, doing so could get giddy investors speculating that the next move for the central bank would be to hike rates.

BOJ Rate Decision

Next up on this week’s roster of rate decisions is the much-anticipated BOJ rate statement on Thursday, April 4, at 12:00 am GMT.

Unlike the bank’s statement last March when it just kept rates and asset purchases steady, the upcoming rate decision could turn out to be a big market-mover. Everyone has their ears peeled for what the uber-dovish Haruhiko Kuroda will have to say in his first rate statement as BOJ head.

However, be wary. Even though Kuroda is expected to announce more easing measures, the rate statement could still go either way for the yen.

Analysts think that the new governor has promised way too much for Japan, like the BOJ hitting its 2% inflation target within two years, that he might not be able to meet market expectations. With that said, even if the BOJ announces that it would expand its asset purchases or that it would start buying bonds with longer maturities, we could still see the yen rally.

BOE Rate Decision

Folks over at the Western hemisphere will also have their share of interest rate statements this week, with the BOE set to announce their decision on April 4 (Thursday) 11:00 am GMT.

Their earlier monetary policy announcement turned out to be quite a disappointment, as MPC members didn’t implement any additional bond purchases. The minutes of this meeting revealed that policymakers were actually concerned about the pound’s ongoing selloff, which was probably one of the reasons why they decided to hold off on further easing.

This doesn’t change the fact that the British economy is still on the brink of a triple-dip recession as the economy already shrank by 0.3% in Q4 2012. With that, policymakers are currently keeping close tabs on business surveys, particularly on this week’s manufacturing and construction PMI releases, which should provide clues as to whether the U.K. economy is likely to rebound or contract further this quarter.

While weaker than expected PMI data could force BOE policymakers to give the go signal on more bond purchases, market analysts are also skeptical that BOE Governor Mervyn King will announce drastic monetary policy changes a few months before passing the baton to incoming head Mark Carney. Then again, King did vote to increase QE by 25 billion GBP during the BOE’s past two monthly meetings so he’s likely to side with the doves again.

If the BOE still refrains from pumping up its easing program, the rate decision could turn out to be yet another non-event. In that case, pound traders might be better off looking at the minutes of the meeting to find out what took place during the closed-door meeting and what policymakers are planning next.

ECB Rate Decision

ECB head Mario Draghi and his men are also set to make their interest rate decision on April 4 (Thursday), a few hours after the BOE’s announcement.

During its latest rate statement, the ECB gave mixed signals as it lower its growth forecasts for the region but Governor Draghi gave a surprisingly upbeat monetary policy speech. He expressed optimism that the euro zone will be able to get back on its feet towards the end of this year and remained hopeful that the current easing measures would keep the region afloat.

It will be interesting to see whether Draghi keeps up his positive outlook for the upcoming statement. After all, this will be the first chance for ECB officials to give their say on the recent bailout in Cyprus. Will this fiscal fiasco prevent them from completely shifting their focus back to economic growth?

Another issue that central bankers might address is the political stalemate in Italy, as lawmakers are still coming up with last-ditch efforts to form a stable government.

Despite these signs of uncertainty in the euro zone, the ECB is still widely expected to keep rates unchanged at 0.75% and make no adjustments to its current easing efforts. Euro traders are likely to pay closer attention to Draghi’s remarks during the press conference as these might give better clues on potential policy changes later on.

There ya have it, folks. Four rate statements in one week. Which one will you trade?