A stable but lackluster economic outlook will push the European Central Bank to tweak its asset purchase program and announce an extension by year-end, although economists polled by Reuters said a move was unlikely next week.
The Federal Reserve should be cautious on interest rate increases due to lingering risks to the U.S. economy, one of its most influential policymakers said today, appearing to signal the chance of a hike by the end of the year was fading.
The dollar held within sight of recent highs against the euro and yen today ahead of meetings of U.S. Federal Reserve and the Bank of Japan that investors on balance expect to be positive for the greenback.
We could be in for another rocky week in the markets with particular focus back on the central banks as we get the latest monetary policy decisions from the Federal Reserve and Bank of Japan, the latter of which is expected to announce new stimulus measures.
Expanding Quantitative Easing could see the European Central Bank owning up to 25% of the 7 trillion euro government bond market, analysts estimate, exacerbating worries about bond scarcity and thin market conditions.
The European Central Bank delved deep into its remaining arsenal of stimulus options on Thursday, cutting all three of its interest rates and expanding asset-buying to boost the economy and prevent ultra-low inflation becoming entrenched.
Ray Dalio, founder of the world's largest hedge fund Bridgewater Associates, says the next big monetary and fiscal move should include an airdrop of money from helicopters to stimulate the U.S. economy.
There is firm support for a deposit rate cut within the European Central Bank's Governing Council but appetite for more radical action is still limited, conversations with policymakers indicate a month before the March rate decision.