Interest rates were left unchanged by most of the central banks last week, but going by the monetary policy statements and comments, the outlook remains bleak and biased to the downside. The Bank of Japan decided to leave interest rates unchanged and instead opted to wait for the lowering of interest rates further into negative territory, a move it made in January, to influence the economy. While committing itself to the 2.0% inflation target rate, the BoJ did however sound cautious in its ability to meet the inflation mandate. Further action from the BoJ is expected in its April meeting.
The Norges Bank cut interest rates by 25bps at its meeting last week and signaled further rate cuts could be possible, although at a slower pace. The NOK initially weakened on the news but soon managed to trim its losses. The BoE and the SNB decided to leave rates unchanged but stuck to the usual rhetoric. The Pound however surged as the BoE hinted that rates were more likely to rise than fall. Next week's CPI data will be closely watched for any signs of an uptick in inflation following the pickup in average wage earnings which increased 2.10%, beating forecasts of 2.0% increase, according to data released by the Office for National Statistics.
The Federal Reserve's FOMC meeting was the big event however. Fed funds rates were left unchanged as widely expected, but against market expectations that the Fed would sound hawkish, the dovish tone saw a selloff in the US Dollar. Most of the currencies gained against the Greenback over the week as a result.
Oil prices also gained strongly over the week posting a fifth consecutive week of gains confirming that the bottom was formed near the lows of $26. WTI crude oil prices gained as the markets expect to see a follow through for coordinated production freezes while the US oil rig counts continue to decline due to financial distress of the shale oil producers. WTI crude oil for April delivery settled Friday at $39.30 per barrel.