The Week Ahead: Get Ready For A Rate Rise

The US Federal Reserve will meet next week to discuss interest rates. According to the BBC, the market is in “no doubt” that the rate-setting committee will raise its benchmark rate after strong jobs growth numbers this month. This would be only the third time in a decade that the US has raised interest rates.

Of greater interest could be the Fed’s outlook for interest rates. Will there be another two or three rate hikes this year? Look out for the response from Singapore banks that include DBS Group (SGX: D05), United Overseas Bank (SGX: U1) and Oversea-Chinese Banking Corporation (SGX: O39).

Ahead of the interest-rate announcement, America will announce its latest inflation numbers for February. In January, consumer prices increased 2.5% year on year. That followed a 2.1% rise in December.

The UK has inflation numbers on tap too. Consumer prices in the UK have risen steadily since April 2016, when the rate of inflation was just 0.3%. In January, the annual rate of inflation had risen to 1.8%. The jump was boosted by rising cost of fuel.

Japan’s central bank left interest rates unchanged at -0.1% when it met in January. With Japanese inflation at 0.4%, it is unlikely that the Bank of Japan will do anything other than stand pat on interest rates this time.

The health of China’s retail sales will be on show next week. In December, they rose 10.9% year on year, following a 10.8% in the previous month. It was the strongest growth since December 2015.

And finally, the finance ministers and heads of central banks from the G20 will meet towards the end of next week in the German town of Baden Baden. On the agenda could be protectionism, free trade and exchange rate manipulation.

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