This week, we have three major central banks holding their first policy decisions for the year: the BoJ, the Norges Bank and the ECB. We don’t expect any policy changes from the BoJ, but we see the case for further downward revisions in the Bank’s inflation forecasts. With regards to the Norges Bank, we expect officials to reiterate that interest rates are likely to be raised again in March. Finally, the ECB is forecast to stand pat as well, but focus will be on whether officials will change their language around the economic outlook.
Monday appears a very light day in terms of data releases scheduled for the European and American sessions. We already got China’s GDP for Q4 during the Asian morning, alongside fixed asset investment, industrial production and retail sales for December. The data showed that the world’s second largest economy slowed to +1.5% from +1.6% in quarterly terms, something that dragged the yoy down to 6.4% from 6.5%. This was the slowest pace since the global financial crisis, something which adds pressure on Chinese authorities to proceed with more stimulus in order to support their economy. Fixed asset investment grew +5.9% yoy in December, the same pace as in November, while industrial production accelerated to +5.7% yoy from 5.4%. The retail sales yoy rate ticked up to +8.2% from +8.1%.
As for the rest of the day, we only get Germany’s PPI for December, which is expected to have slowed to...
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