Deceleration in activity indicators has been a key theme in markets in recent weeks. In the US, we do not think any dip in macro momentum will lead to the near-term-change in the US Federal Reserves’s (Fed) reaction function and we continue to expect three further rate hikes this year.
At their April Governing Council (GC) Meeting, the European Central Bank (ECB) left monetary policy unchanged, and made no alterations to forward guidance, as widely expected. Draghi communicated that the GC did not discuss monetary policy at the meeting, but rather focused the time on the evolution of economic data in the Euro area, and confirmed that they see growth persisting, even if downside risks remain. The market reaction was muted following the press conference.
At their April Monetary Policy Meeting (MPM) the Bank of Japan (BoJ) kept monetary policy unchanged in all areas, as widely expected. Most notably however, the BOJ removed language from the quarterly outlook report about the deadline for achieving the 2% inflation target of around FY2019.