Week ahead: BoJ and ECB expected to hold rates steady

Central bank meetings will be the theme of next week, with decisions due from the Bank of Japan and European Central Bank, as the world continues to wait for inflation figures to fall back down to policymakers’ targets.

First up is the Bank of Japan’s latest monetary policy decision expected early Tuesday morning, which comes fresh off the heels of inflation figures released this week which showed that consumer price pressures eased in December.

Core Japanese inflation, which excludes food and energy, eased to an annual rate of 2.3% from 2.5% the month before, the lowest rate seen since June 2022, which many suggest will ease the pressure on the BoJ to change its negative interest-rate stance next week, with rates expected to stay at -0.1%.

“The central bank is still expected to try and begin the process of a more normal monetary policy over the next few months with rates expected to come out of negative territory in the first half of this year,” said analyst Michael Hewson from CMC Markets.

On Wednesday, the European Central Bank will also announce its policy decision, and is also widely expected to stand pat on rates for the time being, leaving the main refinancing rate at 4.5%

“This should be another straightforward hold. Comments from policymakers at Davos suggest that the governing council is not ready to make a dovish shift just yet,” said analysts at TD Securities.

Speaking at the World Economic Forum in Davos, Austrian central bank head and ECB member Robert Holzmann said that markets are pricing in a sooner-than-anticipated rate cut which “might become self-defeating”.

“We are optimistic that we have a credible prospect of a return of inflation to 2% in 2025. But a lot still needs to go well for that to happen,” Knot said. “Underlying that projection is an interest rate path, assumed interest rate path, that contains significantly less easing than is currently embedded in market pricing. So that runs the risk to become self-defeating.”

Also on the macro front, the closely watched US personal consumption expenditures index – the Federal Reserve’s preferred measure of inflation – is scheduled for Friday and is forecast to show that the annual rate of inflation eased to 3.0% in December from 3.2% in November – which was already the lowest level since April 2021.

“The release of the latest US PCE deflator report for December in the week ahead should [...] provide further evidence that inflation is slowing back to the Fed’s target and laying the foundations for the Fed to begin cutting rates this year,” said economist Lee Hardman from MUFG.

In terms of major corporate news, Crest Nicholson Holdings, Associated British Foods and Premier Foods will update the market on Tuesday; followed by easyJet on Wednesday; IG Group, Wizz Air and Britvic on Thursday; and Superdry and WH Smith on Friday.

Monday January 22

QUARTERLY PAYMENT DATE

Abrdn DIversified Income And Growth

GMS

Smart Metering Systems

TRADING ANNOUNCEMENTS

S4 Capital

Tuesday January 23

FINALS

Crest Nicholson Holdings, Watkin Jones

EGMS

SDIC Power Holdings Co.,Ltd GDR (Reg S)

AGMS

C4X Discovery Holdings , Goldplat, Marston's, Mitchells & Butlers

TRADING ANNOUNCEMENTS

Associated British Foods, Premier Foods

UK ECONOMIC ANNOUNCEMENTS

Public Sector Net Borrowing (07:00)

Wednesday January 24

INTERIMS

Hargreaves Services, Van Elle Holdings

INTERIM DIVIDEND PAYMENT DATE

Baltic Classifieds Group, Discoverie Group, Pharos Energy

QUARTERLY PAYMENT DATE

Alpha Real Trust Ltd.

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

Crude Oil Inventories (US) (15:30)

MBA Mortgage Applications (US) (12:00)

AGMS

Botswana Diamonds, Henderson Far East Income Ltd., Lowland Investment Co, Pantheon Resources, Tracsis

TRADING ANNOUNCEMENTS

Computacenter, easyJet, Lords Group Trading, Palace Capital , PensionBee Group , Quilter

Thursday January 25

INTERIMS

IG Group Holdings, Newmark Security PLC, Time Finance

INTERIM DIVIDEND PAYMENT DATE

Sirius Real Estate Ltd., The Global Smaller Companies Trust

INTERIM EX-DIVIDEND DATE

Brickability Group , City of London 4.2% Cum 1st Prf Stk, City of London Investment Trust 4.2% Non-Cum 2nd Prf Stk, City of London Investment Trust Preference Ord Stk 14% Non-Cumulative 1, Ferrexpo, Pennon Group, Solid State

QUARTERLY PAYMENT DATE

General Electric Co (CDI), Law Debenture Corp.

QUARTERLY EX-DIVIDEND DATE

City of London Inv Trust, JPMorgan Claverhouse Inv Trust, Tufton Oceanic Assets Limited NPV

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

Continuing Claims (US) (13:30)

Durable Goods Orders (US) (13:30)

GDP (Preliminary) (US) (13:30)

IFO Business Climate (GER) (09:00)

IFO Current Assessment (GER) (09:00)

IFO Expectations (GER) (09:00)

Initial Jobless Claims (US) (13:30)

New Homes Sales (US) (15:00)

Q3

Wizz Air Holdings

GMS

Societatea Nationala De Gaze Naturale Romgaz S.A. GDR (Reg S)

FINALS

IDOX, Titon Holdings

AGMS

Alteration Earth, Barings Emerging Emea Opportunities , Britvic, Greencore Group (CDI), Henderson European Focus Trust, Treatt

TRADING ANNOUNCEMENTS

Conduit Holdings Limited Com Shs (DI), Empresaria Group, Fuller Smith & Turner, Intermediate Capital Group, Mitie Group, PPHE Hotel Group Ltd

FINAL EX-DIVIDEND DATE

Carr's Group, RWS Holdings, Tracsis, Victrex plc

Q1

Britvic

Friday January 26

INTERIMS

Superdry

INTERIM DIVIDEND PAYMENT DATE

Auto Trader Group , Big Yellow Group, Burberry Group, Cranswick, Foresight Group Holdings Limited NPV, Iomart Group, Latham (James), Montanaro European Smaller Companies Trust, Templeton Emerging Markets Inv Trust, Walker Crips Group

QUARTERLY PAYMENT DATE

Abrdn Private Equity Opportunities Trust, Marble Point Loan Financing Limited NPV, Value and Indexed Property Income Trust

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

GFK Consumer Confidence (GER) (07:00)

M3 Money Supply (EU) (09:00)

Personal Consumption Expenditures (US) (13:30)

Personal Income (US) (13:30)

Personal Spending (US) (13:30)

EGMS

Air China Ltd.

AGMS

Avon Protection, On The Beach Group , WH Smith

TRADING ANNOUNCEMENTS

Paragon Banking Group, Record, WH Smith

UK ECONOMIC ANNOUNCEMENTS

GFK Consumer Confidence (00:01)

FINAL DIVIDEND PAYMENT DATE

Character Group, Ultimate Products