The key event today will be the Fed announcement and new projections at 19:00 followed by Janet Yellen's debut as host of the press conference at 19:30. We expect the Fed to taper its assets purchases by USD10bn, taking monthly purchases down to USD55bn. We also see only moderate revisions to its forecasts. The Fed is likely to mention the recent economic weakness in the statement, highlighting bad weather as the most important factor. Some key figures for February and March have been a bit better than expected and the Fed will take some comfort in that. At the press conference, we believe Yellen will reiterate that it will take a notable deterioration of the outlook for the Fed to change the plan of tapering USD10bn per meeting this year. The projected rate path should be broadly unchanged as the Fed is still optimistic on the outlook for the US economy once looking through the short-term softness.
We will also get minutes from the latest Bank of England meeting and the UK labour market report which will probably show another month of decline in the number of jobless. The unemployment rate is expected to stay unchanged, though, at 7.2%.
The Russia/Ukraine crisis will continue to be watched as well as the situation is still quite unpredictable and should be followed closely.
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