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Next Week’s News Today: Will The US Fed Raise Rates?

Hang onto your hats. The US Federal Reserve will announce its interest-rate decision on Thursday at 2am Singapore time. Some experts think there is zero chance of a rate hike. But the economic data would seem to suggest otherwise.

If the Federal Reserve’s decision is indeed data-dependent, then to leave interest rates where they are – at 0.5% – would be ludicrous. The US economy is growing at around 2%; core inflation is rising at 2.2% a year and the jobless rate is below 5%. But as always, which side of the divide you belong depends on which set of data you choose to look at. Economics is such fun.

The Bank of Japan has a big decision to make about interest rates too. The bank’s huge “Negative Interest Rate” bazooka in February has been overshadowed by an even bigger Howitzer that the European Central Bank has brought to the table. Will the BoJ’s governor, Haruhiko Kuroda, up the ante on Tuesday by going even deeper into negative territory, as he said he could if he had to?

Other countries with interest-rate decisions include Switzerland, where rates are already at minus 0.75%, India, Norway and the UK. How low can the Swiss go?

Some key economic numbers from the US could put the cat amongst the pigeons next week. These include inflation numbers and retail sales, which has been rising at a healthy rate. In January retail sales increased 3.4% from a year ago. American people power is going where US industries fear to tread.

Singapore has retail sales figures too. They increased 2.9% in December from a year ago. Sales of motor vehicles were buoyant, which augurs well for Jardine Cycle & Carriage (SGX: C07). Meanwhile, a strong showing in medical goods and toiletries bodes well for Dairy Farm International (SGX: D01).

And finally, Thursday is St Patrick’s Day. There’s a lot happening around the Boat Quay area. So it’s time to put away your spreadsheets and start looking for those elusive leprechauns.

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