The Fed meeting (and BOE and BOJ meetings) highlights the week

Sunday, 16/06/2019 | 21:28 GMT

Will the Fed pave the way for a cut in July?

The big event this week, will be the FOMC decision and presser on Wednesday (at 2:00 AM ET/1800 GMT). The Fed will also release it's dot plot and expectation for growth, inflation and employment. The market has taken down the expectations for a cut to 21% for this week, but the expectations for July remain high at 85.8%.

The statement and the Powell presser will be the Fed's opportunity to at the very least, ease in the idea that the Fed is ready and willing to ease given the right circumstances..

In favor of ease is that inflation is either still transitory (as expressed in the May FOMC meeting) or is simply not going higher, and the expectation for slower growth as a result of the tariffs. The Fed therefore has the opportunity to let the economy run hot. On the sit tight and wait it out path is that retail sales and industrial production from last week, were pretty good and that although employment dipped in May, overall employment conditions remain tight.

At 85%, the market is forcing/expecting the Fed to conform. If they don't the dollar has a lot of room to run.

Other central bankers will meet this week including the BOE and the BOJ. For BOE, there are some on the MPC who are hinting at a hike. Michael Saunders indicated that he sees no need to wait until Brexit before raising rates. Chief economist Andy Haldane said the time is nearing when a hike is needed to keep inflation pressures in check. I don't know. With Brexit uncertainty and distorted data as a result of the uncertainty, the Fed (or the market) looking to cut, it might make for sense to just lay low. Nevertheless, there are some who think the vote might not be unanimous. The decision will be made on Thursday at 7 AM ET/1100 GMT.

The BOJ is also meeting and expecting to keep rates unchanged (once again). The decision will be announced on Thursday.

Other events this week includes:

Monday: