What’s top of investors’ minds this week?

US FOMC likely neutral, but hawkish risk exists
The US Federal Reserve and Chair Powell will have to walk a tightrope at this week’s FOMC meeting. The FOMC needs to acknowledge that President Trump’s tariff agenda has increased inflation risk and appears to be pushing inflation expectations sharply higher – the University of Michigan’s survey showed that inflation expectations for the next 5 to 10 years jumped to 3.9% in February, a 32-year high. Powell is likely to acknowledge that this poses risks to growth, although he is expected to stick to his recent argument that there is enough uncertainty about the actual implementation of tariffs to justify waiting and watching.

Bank of Japan likely to avoid surprises
The Bank of Japan (BoJ) will probably keep rates on hold, supporting market pricing for only one more 25bps rate hike later this year to 0.75%. At this stage, the Japanese Trade Union Confederation has reported negotiated wage gains of 5.5% vs. 5.3% last year, which is probably not enough to trigger a BoJ shift towards hawkishness.

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Vis Nayar

Vis Nayar is the Chief Investment Officer and a member of the Executive Management Committee at Eastspring Investments. Vis spearheads Eastspring’s investment platform encompassing equities, fixed income, multi asset and quantitative solutions, and oversees investment offerings across markets.

Information provided is general information and is for educational purposes only, and does not include, or constitute as, financial product advice.