Daily update
Daily update
- The Bank of Japan did exactly what the Nikkei said it would. The only surprise was that two members of the policy committee appear not to have read the article, and disobeyed by dissenting. The Bank of Japan has had more internal dissent than the Federal Reserve in the past 18 months. Dissent between economists is perfectly natural.
- It is now the turn of the Fed, with a policy decision and the roulette wheel of opinions that Fed Chair Powell’s press conferences represent. We also get the fabled dot plots—an attempt to offer misleading precision as to the views of individual FOMC members. Discussions about slowing the pace of quantitative tightening are likely to be elaborated with the minutes.
- The press conference will set expectations for rate cuts, leaving markets at the mercy of Fed Chair Powell’s whimsical communication style. Financial “markets” are not a single entity pricing in rate cuts—many bond investors will never have speculated in Fed funds futures, for instance.
- UK inflation data is expected to show a steep slowdown in February. Food price inflation will still overstate reality (because of supermarkets’ two-tier pricing). Even with that, the UK’s post-pandemic inflation experience is similar to that of many European economies.
