Three world central banks will hold their meetings this week

This week, three meetings of the world's largest central banks will be held – the US Federal Reserve, the European Central Bank and the Bank of England. 

US Federal Reserve

Market participants expect that the US Federal Reserve will announce a faster phasing out of economic stimulus and an earlier start of a new cycle of interest rate hikes. Consensus forecasts suggest that the volume of asset purchases by the Fed will decrease from $120 billion per month to zero no later than the end of March. 

Such a move will pave the way for further interest rate increases in the middle of next year. In addition, the main reason for such measures of the regulator is the off-scale inflation in the United States: it is at the highest level since 1982 (6.8%). Moreover, producer prices are also growing at the highest rate in the last decade. 

Previously, analysts assumed that the bad statistics were just the result of the distorting base effect of the previous year. 

ECB

The European Central Bank will have to face for the first time the question of whether it should re-introduce some formal restrictions on the purchase of bonds. The term of the «Emergency Procurement Program in case of a pandemic» expires at the end of March 2022, and supporters of the «hawkish» policy of the regulator seek to restore some restrictions on the purchase of bonds. 

However, many analysts assume that the ECB will buy bonds worth 40 billion euros per month until the end of next year, and a rate increase is not expected until 2023. 

The regulator notes that it can afford to take its time with changes in monetary policy, since inflation in the region is not as high as in the United States, and the shortage of labor is still quite acceptable. 

Bank of England

The Bank of England will have to choose between letting inflation expectations get further out of control, or raising interest rates just at a time when a new wave of coronavirus is slowing the economy.

The appearance of a new strain of omicron in the country led to some tightening of quarantine rules in the country and allowed representatives of the British regulator to take a break and observe the development of events before moving on to «hawkish» rhetoric. And this is despite the fact that annual inflation in the country exceeded 5% in November.