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Federal Reserve monetary policy decision in focus

The US Federal Reserve's monetary policy decision is eagerly awaited this evening. The main focus will be on Fed Chairman Jerome Powell's remarks at the press conference that follows, and the timing of the first rate cut that financial markets are expecting. Meanwhile, China's central bank left its key interest rates unchanged. Tomorrow, the Swiss National Bank, the Bank of England and the Norwegian Central Bank will follow with their monetary policy decisions.

Alessandro Fezzi, LGT
Reading time
5 minutes
Federal Reserve Monetary Policy
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Most markets in the Asia-Pacific region were higher in the middle of the week. Investors digested the Bank of Japan's decision to abandon its negative interest rate policy and are now awaiting the US Federal Reserve's decision. The People's Bank of China kept its key one-year and five-year lending rates unchanged at 3.45% and 3.95% respectively. The one-year LPR (Loan Prime Rate) is the benchmark for most household and corporate loans, while the five-year LPR is the benchmark for most property mortgages. The Hang Seng Index in Hong Kong reversed earlier declines to rise 0.6%, while the CSI 300 in mainland China also added 0.2% after opening lower. In Japan, financial markets were closed for a public holiday. South Korea's Kospi rose 1.2%, led by a near 5% rise in heavyweight Samsung Electronics. In Australia, the S&P/ASX 200 was slightly lower, a day after the Reserve Bank of Australia kept its cash rate on hold at 4.35% for the third day in a row.

In the US, stock indices posted gains on Tuesday. The focus was on the Federal Reserve's decision on interest rates and comments from Fed Chairman Jerome Powell, which the markets are hoping will provide clues on future monetary policy. The Dow Jones Industrial closed 0.8% higher at 39,110.76. The S&P 500 gained 0.6% to 5,178.51 and the Nasdaq closed almost 0.3% higher. The yield on ten-year US government bonds was slightly lower than the previous day at 4.29%.

Meanwhile, we received strong figures from the US construction industry. For example, new construction starts rose by 10.7% in February compared to the previous month. Analysts had expected a consensus increase of 8.2%. Building permits, which are an even more important indicator of future construction activity, rose by just under 2% in February from the previous month.

The latest survey results from the Mannheim-based Centre for European Economic Research (ZEW) signalled a further improvement in the economic expectations of German financial experts. The indicator rose by almost twelve points to 31.7 points in March, its highest level since February 2022. According to the ZEW, the expectation that the ECB will ease interest rates in the middle of the year plays a decisive role in the sentiment of the institutional investors and financial analysts surveyed.

Corporate news in focus: Micron Technology Q2, Prudential Q4, Tencent Holdings Q4.

Economic data in focus: UK consumer and producer prices, Germany producer prices, ECB President Lagarde speaks, Italy industrial production, Eurozone consumer confidence, FOMC rate decision (19:00 CET) and press conference (19:30).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Lten steht Ihnen ein Berater der Bank gerne zur Verfügung.

Herausgeber: LGT Bank (Schweiz) AG, Glärnischstrasse 36, CH-8027 Zürich
Redaktion: Alessandro Fezzi
Quelle: LGT Bank (Schweiz) AG

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