Top 5 Economic Calendar Events for March 12-March 18

Washington (Mar 11)  The Federal Reserve policy meeting will be the main important focus with forward guidance and rate projections more important than the actual rate decision.

The Bank of Japan will announce its latest policy decision during the week and the Swiss National bank will also hold its latest quarterly meeting. There is no room for complacency, but the most likely outcome is for no change in policy.

Political events will have an important impact with a general election in the Netherlands and an important G20 Summit in Germany.

US political developments will also be important as the budget debate intensifies with trade and currency policies also very important.

1. US Federal Reserve meeting

The latest Federal Reserve policy decision will be announced on March 15th at 14.00 ET.
 
The latest statement will be released at the same time and the FOMC will also issue its latest economic forecasts along with individual interest rate projections from committee members. Chair Yellen will hold a press conference after the statement is released.

Following the rhetoric from key Fed officials there is little doubt that rates will be increased at the meeting. The only real stumbling block during the blackout period could have been the monthly employment report, but employment growth came in above expectations.

Markets have moved to price in a further 0.25% rate increase and reaction to the rate increase itself should be relatively limited. The most important aspect of the meeting will, therefore, be forward guidance on the policy outlook.

In particular, markets will be looking at the interest-rate projections from FOMC members to assess whether there is any shift in the forecasts made in December. Any upward projection would increase speculation over a faster pace of Fed tightening while there will be some disappointment if projections are little changed.

Given that there has still have not been any detailed tax proposals from President Trump, the Fed will be reluctant to make any strong commitments surrounding future policy.

Assumptions used by FOMC members will also be an important focus and markets will be looking for indications from Yellen on whether there has been a further shift towards pricing in the potential impact of any fiscal stimulus into rate projections.

2. US consumer prices

The latest CPI data will be released on Wednesday March 15th at 08.30 ET.

The CPI release comes only a few hours ahead of the Federal Reserve policy decision, although the FOMC members will get advance notification of the data.

Assuming the Fed does raise rates, the main potential impact of the CPI data will be on medium-term expectations surrounding monetary policy.

The January data was much stronger than expected, primarily due to a further surge in energy prices on the month, and markets will want evidence on whether there has been a further increase in energy costs.

Even more important will be whether there is any evidence of a wider increase in inflation and potential second-round effects from higher energy prices in areas such as transport.

If there is little evidence of a wider increase in inflation, there will be reduced pressure on the Fed to tighten monetary policy more aggressively, especially with energy prices weakening this month.

The latest retail sales data will also be released at the same time.

3. Bank of England rate decision

The latest Bank of England monetary policy decision will be announced on Thursday March 16th at 08.00 ET.

At this meeting there will be no updated inflation report and no press conference from Governor Carney. The Monetary Policy Committee (MPC) policy summary will be released along with the minutes. This will be the first meeting for new MPC member Hogg who has replaced Shafik on the committee.

Since the last meeting, industrial data has remained firm, but the overall data flow has been slightly disappointing with evidence of weaker consumer spending. In this context, the MPC is not likely to take a more hawkish tone than seen at the previous meeting.

The commentary on inflation will be important and the more hawkish MPC members are still likely to express their concerns over the outlook.

4. G20 meeting

The latest G20 meeting will be held in Germany on March 17-18th.

The G20 meeting will be an important global focus, especially given uncertainties surrounding the new US Administration’s policies on trade and currencies, both key areas for the G20 members.

This will be the first major meeting for new US Treasury Secretary Mnuchin and there will be strong market interest in the US stance towards the dollar.

The US trade deficit is also a much more important focus under the new Administration with President Trump and his team looking for ways to narrow the deficit. Trump has already criticised the trade policies of China, Japan and Germany while Director of the National Trade Council Navarro stated that the German trade surplus was one of the most difficult issues.

According to sources, the draft G20 communique has dropped references to rejecting protectionism or competitive devaluations with no reference to the previous comments that countries should not target exchange rates for competitive purposes.

There is the potential for drafts to be changed substantially ahead of the meeting, but the decision to remove large parts of previous statements is a clear indication that the US will push for a different tone and that it will be difficult to reconcile the differences.

Overall commentary on trade and currency policies will be watched very closely and risk appetite is likely to be damaged if there is an acrimonious tone.

5. Netherlands general election

The Netherlands will vote in its parliamentary election on March 15th. The Dutch general election will be important in its own right and could also have important implications for both the French election and European Union cohesion as a whole.

The main focus will be on the performance of the populist, anti-immigration Freedom Party (PVV) led by Wilders. If the Freedom Party comes first in the election, populist parties will be seen to have momentum, which would also tend to boost support for the French National Front under Le Pen.

This would be the case even though other parties have pledged not to work with the Freedom Party.

If the Freedom Party performs not as well as expected, and there has been some sign of slippage in opinion polls, then overall populist momentum could fade slightly, which would also dampen expectations of any possibility of a National Front victory in France.

Opinion polls overall suggest that five parties are in contention to gain the most number of seats and there are a large number of undecided voters. Victory for Prime Minister Rutte’s VVD party would also help support sentiment surrounding EU cohesion.

Source: EconomicCalendar