The key event today is the FOMC meeting, which is set to conclude with merely a statement (no press conference or projections). We expect the Fed to maintain the target range at 0.25-0.50% in line with both consensus and market pricing, see FOMC preview: June hike unlikely as Yellen emphasises downside risks , 25 April. Although financial stress has eased and China has stabilised, we think the dovish members are likely to maintain a cautious approach and indeed, Fed chair Yellen emphasised downside risks in her last speech. The big question is whether the Fed will keep the door open for a June rise or not: as the pickup in inflation has not 'proved durable' and growth has slowed in Q1, we think it will be too early for the Fed to do so today.
In the euro zone, we will get data for money supply and bank lending in March, which we expect to continue the latest positive trend. Besides being a key indicator for economic growth, we note that bank lending is now an important factor for the ECB's TLTRO II loans, as it determines whether banks will have a negative or zero interest rate on the loans.
Also watch out for the Reserve Bank of New Zealand meeting, albeit both we and consensus look for rates to be kept unchanged at 2.25% tonight.
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