Interest rates in Japan remain unchanged, with announcements of increases in the near future. The Bank of England waits to see what will happen with inflation, maintaining the same cost of money. The Polish zloty weathered a week full of decisions by central bankers unscathed.
Today BoJ
Today, the decision-making meetings of the central banks continued. After the Federal Reserve (Fed) and the Bank of England (BoE), it was the Bank of Japan’s (BoJ) turn. There were no surprises, and the main interest rate in the Land of the Rising Sun remains at the current level of 0.25%. However, it should be added that the overall tone of the commentary after the decision was hawkish. Chairman Ueda announced that raising the cost of money is the base scenario, as the Japanese economy is on the right track. This could suggest that we will see a scenario of raising interest rates at future meetings. However, it should be added the market does not believe in this scenario much, showing a mere 30% chance of the cost of money rising by 10 basis points by the end of the year. The yen is losing against the US dollar on the FX market today, almost 0.7%, however, the hawkish tone after the dovish decision could support JPY in the short term.
We’ll see
We have a slightly different variation of monetary policy in the United Kingdom. Voices have emerged suggesting the BoE may decide to lower the cost of money. Nothing happened, and maintaining the level of rates by a vote of 8 to 1 may suggest that the Bank of England is still concerned about high inflation in the country. It will make its decisions based on price dynamics. We may therefore witness alternating meetings, the market will receive a decrease in the cost of money, after which policymakers will decide it’s time to pause and watch what’s happening. This shows that the BoE intends to go its own way, not even looking at the Federal Reserve, which historically was a well-known scenario. The British pound is one of the strongest currencies on the FX market today, unsurprisingly, since the BoE did not cut interest rates.
All quiet here, nothing’s happening
This week has seen a lot happening on the market, particularly the Federal Reserve’s meeting brought a surprise and cut the cost of money by 50 basis points. Nevertheless, volatility on the national currency was not too great. Just look at EUR/PLN, where the range of fluctuations is within 2 cents, which given so many events can be seen as great resistance to external factors. Even on the USD/PLN pair, we have a drawn anchor and a rather sluggish descent from around 3.85 to the level of 3.82, i.e., local support. Today there are not many important positions on the macro calendar, so one can expect the status quo to be maintained. What else should we pay attention to today? For CAD, retail sales may be crucial, as well as the speech from the head of its central bank.
Author: Krzysztof Pawlak, Currency Analyst Walutomat.pl
Source: https://ceo.com.pl/zloty-stabilny-po-decyzjach-bankow-centralnych-36419
