This week promises to be decisive for the direction of global monetary policy. In addition to the highly anticipated “Super Wednesday”, marked by the meetings of the Federal Reserve (USA) and several other Central Banks around the world, they will also define their interest rates in the coming days. With the economic scenario still uncertain, most economies are adopting a cautious approach, awaiting new data to guide their future decisions. 

United States: Federal Reserve Maintains Cautious Stance

After reducing its rates by 100 basis points at the end of 2024, the Federal Reserve (Fed) opted for a technical pause earlier this year, keeping interest rates between 4.25% and 4.50%. For this Wednesday’s decision, market consensus points to maintaining interest rates, while traders will be attentive to the Federal Open Market Committee (FOMC) projections for inflation and the next steps in monetary policy.

In recent months, the Fed has adopted a more rigid tone, warning about inflationary risks. With the new tariffs imposed by the US government, economists believe that an upward revision of inflation projections may occur, influencing future decisions by the central bank. 

United Kingdom: Inflation Puts Pressure on the Bank of England 

The Bank of England (BoE) is facing challenges in controlling inflation, which makes it difficult to reduce its rates currently set at 4.5%. Although some projections indicate an improvement in inflation by 2025, the most recent data show that the Consumer Price Index (CPI) jumped from 2.5% in December to 3.0% in February. 

Meanwhile, the European Central Bank (ECB) maintains its rates at 2.5% and is expected to reduce them throughout the year. This makes British monetary policy different from that of Europe, raising doubts about the viability of keeping interest rates at higher levels for a long time.

Switzerland: Interest Rate Cuts in Sight? 

Unlike other economies, Switzerland may move in the opposite direction and cut its rates from 0.5% to 0.25%. The reason? Inflation in the country remains very low, registering an increase of just 0.3% last month, the lowest variation since April 2021. 

To avoid an excessive slowdown in the economy, the Swiss National Bank (SNB) may bring forward the cut at its next meeting, scheduled for March 20. The market also expects new cuts to occur in June, consolidating a scenario of lower interest rates in the country.

Japan: Expectations for New Signals from the Bank of Japan

The Bank of Japan (BoJ) is expected to keep its monetary policy unchanged this week, but analysts are awaiting indications on future interest rate hikes. Inflation in the country has been slowing, falling from 4% in January to a projected 3.5% in February, driven by the stabilization of food prices and the resumption of energy subsidies.

Another factor that could influence the BoJ’s policy is the outcome of the annual wage negotiations, known as “Shunto”, which can directly impact inflation and economic growth in Japan.

China: Moderate Growth Keeps Interest Rates Steady

The People’s Bank of China (PBoC) is expected to keep its benchmark rate unchanged, in a decision expected between Wednesday and Thursday. The country is still facing modest economic growth, with industrial production and retail sales figures below expectations.

The only possible change could be in the 7 day reverse repurchase rate, used to manage liquidity in the financial system, but nothing that would significantly impact the Chinese macroeconomic scenario in the short term.

What to Expect from Central Banks’ “Super Week”?

The decisions made by the world’s major central banks this week will be crucial in determining the direction of global monetary policy in the coming months. While the US, UK, Japan and China are expected to keep their rates unchanged, Switzerland could begin a new cycle of rate cuts, given the slowdown in inflation.

Traders will be paying close attention to the economic projections released by central banks, which will serve as a barometer for future decisions and indicate whether interest rate cuts will gain momentum throughout 2025.

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