Key events and releases next week highlighted by the FOMC rate decision

Next week’s list of important economic events and releases will be highlighted by the FOMC rate decision on Wednesday, March 16 at 2 PM ET. Fed’s Powell will hold a press conference at 2:30 PM.

The long-awaited Fed hike is expected at that time. The question is “Will the Fed surprise the market with a 50 basis point hike or stick to 25 basis points?”.

The expectations are for 25 basis points.

The last time the Fed hiked rates was back in December 2018 when the Fed hiked 25 basis points to a target range of 2.25% -2.50%. By March 16, 2020 the Fed cut rates to a target range of 0% to 0.25%. It has stayed at that level since that time.

With CPI inflation rising to 7.9% to its highest level in 40 years, it is time for the tightening process to begin.

Fed chair Powell has signaled that he prefers 25 basis points when he testified on Capitol Hill near the start of March. However, he commented that he would not be opposed to a 50 basis point hike down the road if inflation did not start to show improvement (see his comments HERE and HERE).

The Fed will also give their latest central tendencies for GDP, unemployment, and PCE inflation. In December they pegged end of the 2022 central tendency expectations at:

• real GDP: 3.6% – 4.5%
• unemployment rate 3.4% – 3.7%
• PCE inflation 2.2% – 3.0%
• PCE core inflation 2.5% – 3.0

I would expect that GDP would be revised down, unemployment rate will remain somewhat steady. PCE inflation will rise as will core PCE.

Meanwhile the dot plot forecast saw the Fed funds rate moving to 0.75 to 1.00% when it was last released in December (three fed tightenings). That will move higher as well with 4 or 5 most likely. Some private economists see as many as seven tightenings in 2022

Other key events in the US next week includes:

• US PPI data will be released on Tuesday at 8:30 AM with the expectations of 0.9% month on month versus 1.0% last month. The final demand year on year is expected to rise to 10.0% from 9.7% last month. Ex food and energy is expected to rise by 0.6% versus 0.8% and top out at 8.7% versus 8.3% last month for the YoY.
• Retail sales on Wednesday at 8:30 AM ET. The expectations are 0.5% versus 3.8% last month. Core retail sales (ex autos) are expected to rise by 1.0% versus 3.3%
• industrial production data out of the US will be released on Thursday with expectations of 0.6% versus 1.4% last month.
• The monthly regional Fed business  indices 
  Indices
  
  Stock market indices represents an index that measures a particular stock market or a segment of the stock market. These instruments are important investors as they help compare current price levels with past prices to calculate market performance.The main two parameters for indices are that they are both investable and transparent. For example, investors can invest in a stock market index by buying an index fund, which is structured as either a mutual fund or an exchange-traded fund, and track an index. The difference between an index fund’s performance and the index, if any, is called tracking error. Most major countries boast multiple indices. Commonly traded indices include the S&P 500, NASDAQ-100, Dow Jones Industrial Average (DIJA), EURO STOXX 50, Hang Seng Index, and many more.Stock market indices can be characterized or segmented by the index coverage set of stocks. The overall coverage of an index constitutes an underlying group of stocks, most commonly grouped together by underlying investor demand.How to Trade IndicesRetail brokers offer indices exposure through the use of contracts-for-difference (CFDs) or exchange-traded funds (ETFs). Each are popular ways to trade specific markets and are almost always on offer at most brokers.Investors can choose between multiple types of indices that traditionally fall within several categories. This includes country coverage, regional coverage, global coverage, exchange-based coverage, and sector-based coverage.All indices are ultimately weighted in a number of different ways. The most common mechanisms include market-capitalization weighting, free-float adjusted market capitalization weighting, volatility weighting, price weighting, and others.
  
  Stock market indices represents an index that measures a particular stock market or a segment of the stock market. These instruments are important investors as they help compare current price levels with past prices to calculate market performance.The main two parameters for indices are that they are both investable and transparent. For example, investors can invest in a stock market index by buying an index fund, which is structured as either a mutual fund or an exchange-traded fund, and track an index. The difference between an index fund’s performance and the index, if any, is called tracking error. Most major countries boast multiple indices. Commonly traded indices include the S&P 500, NASDAQ-100, Dow Jones Industrial Average (DIJA), EURO STOXX 50, Hang Seng Index, and many more.Stock market indices can be characterized or segmented by the index coverage set of stocks. The overall coverage of an index constitutes an underlying group of stocks, most commonly grouped together by underlying investor demand.How to Trade IndicesRetail brokers offer indices exposure through the use of contracts-for-difference (CFDs) or exchange-traded funds (ETFs). Each are popular ways to trade specific markets and are almost always on offer at most brokers.Investors can choose between multiple types of indices that traditionally fall within several categories. This includes country coverage, regional coverage, global coverage, exchange-based coverage, and sector-based coverage.All indices are ultimately weighted in a number of different ways. The most common mechanisms include market-capitalization weighting, free-float adjusted market capitalization weighting, volatility weighting, price weighting, and others.
  Read this Term will kickoff with the Empire State manufacturing index on Tuesday at 8:30 AM. The expectations are 6.9 versus 3.1 last month. On Thursday at 8:30 AM, the Philly Fed manufacturing index is expected to come in at 15.1 verse 16.0

Other key events/releases include:

•  Bank of England 
  Bank of England
  
  The Bank of England (BoE) functions as the United Kingdom’s central bank and is one of the key drivers of monetary policy in Europe.  As one of the world’s oldest central banks and established in 1694, the BoE is owned by the British government.  Its central mandate involves maintaining and targeting interest rates while using other tools to help either stimulate or contract the economy. Moreover, the BoE is responsible for producing the UK’s bank notes as well as supervising key bank payment systems. The bank helps not only craft monetary and financial stability within the UK but also yields enormous influence on the country’s currency, the British pound. How does the Bank of England (BoE) Affect Forex Traders? The BoE is one of the closest watched central banks by forex traders, along with the US Federal Reserve and European Central Bank (ECB).  FX traders are regularly tuned into any updates out of the central bank given its potential to affect the pound and many other currency pairs. The Euro for example is highly correlated to the pound. Furthermore, the bank also has at its disposal a variety of monetary policy tools that are capable of impacting the pound. One of the most common of these historically has been quantitative easing (QE), among others, which can increase or decrease the value of the pound. Beyond FX, the BoE helps address domestic inflation, tinkering interest rates to stimulate the economy. Many investors are cognizant of the BoE interest rate as this measure is instrumental for a variety of economic barometers.
  
  The Bank of England (BoE) functions as the United Kingdom’s central bank and is one of the key drivers of monetary policy in Europe.  As one of the world’s oldest central banks and established in 1694, the BoE is owned by the British government.  Its central mandate involves maintaining and targeting interest rates while using other tools to help either stimulate or contract the economy. Moreover, the BoE is responsible for producing the UK’s bank notes as well as supervising key bank payment systems. The bank helps not only craft monetary and financial stability within the UK but also yields enormous influence on the country’s currency, the British pound. How does the Bank of England (BoE) Affect Forex Traders? The BoE is one of the closest watched central banks by forex traders, along with the US Federal Reserve and European Central Bank (ECB).  FX traders are regularly tuned into any updates out of the central bank given its potential to affect the pound and many other currency pairs. The Euro for example is highly correlated to the pound. Furthermore, the bank also has at its disposal a variety of monetary policy tools that are capable of impacting the pound. One of the most common of these historically has been quantitative easing (QE), among others, which can increase or decrease the value of the pound. Beyond FX, the BoE helps address domestic inflation, tinkering interest rates to stimulate the economy. Many investors are cognizant of the BoE interest rate as this measure is instrumental for a variety of economic barometers.
  Read this Term interest rate decision on Thursday at 8 AM ET. The expectations are for another hike of 0.25 basis points from 0.5% to 0.75%. It would be the third hike in a row and the second of 25 basis points after a 50 basis point hike to kickstart the rate hike cycle. The move higher would take the rate back to the level that existed before the pandemic in 2020.. The January CPI inflation in the UK at the highest and 30 years
• The Reserve Bank of Australia will release their monetary policy meeting minutes on Tuesday at 8:30 PM ET (on Monday night). On March 8, the reserve Bank of Australia’s Lowe said that it was plausible the cash rate will rise later this year.
• Australia’s employment change will be released on Thursday in Australia at 8:30 PM ET (on Wednesday night). The expectations are for a change of 40.3K vs 12.9K last month. The unemployment rate is expected to dip to 4.1% from 4.2%
• Canada will release their CPI data on Wednesday at 8:30 AM ET. The expectations are for a 0.9% month-to-month increase. The common CPI year on year is expected at 2.4%, the median year on year CPI at 3.4%, and the trend CPI at 4.1%

Then there is the geopolitical risk from Ukraine/Russia. The Russian stock market has been closed all week. Nickel futures on the LME as also been closed after they rose to $100,000 earlier this week.