16 March 2018
Key events in EMEA and Latam next week

Next week looks set to be busy for EMEA, particularly in Poland with an array of activity and central bank meetings in Brazil and Russia 

Poland: expect an improvement in the macroeconomic and fiscal outlook

We expect Moody’s to maintain current rating. The deterioration of institutional quality assessment is likely to be benign without a significant drop in the score. On the other hand, the macroeconomic and fiscal outlook should improve. Monthly activity data (production, retail sales) should support a strong GDP reading close to 5% year-on-year also in 1Q18.

Key events in developed markets next week

Will the new Fed chair result in a new Fed dot plot? Will the EU summit offer any sign of a Brexit transition deal?

New Fed chair, new dot plot?

For markets, there’s little doubt that a rate hike is on the way next week. Of the possible risks that may have knocked the Fed off course this month – a government shutdown, market turmoil, or data distortions from the cold weather – none have really come to pass.

So with a hike fully priced in, investors will instead be closely scrutinising the Fed’s infamous 'dot plot' for any sign that the Fed, with a new chair at the helm, is considering upping the pace of hikes from three to four this year. Back in December, only four out of 16 Fed members expected four hikes in 2018, so arithmetically it will take another four or five to join this camp for the median dot to move upwards.

Whatever happens, with core inflation on the verge of returning to target and the economy continuing to perform strongly, we think the Fed will ultimately follow through with four rate rises this year.

Asia week ahead: three central banks to meet

Three Asian central banks are due to meet next week but all thinking and no action means they are most likely to be non-events -  though the Philippines central bank could steal the spotlight

Philippines central bank defies tightening

The recent spike in Philippines’ consumer price inflation (CPI) above the central bank's 2-4% target has put monetary policy under the spotlight ahead of the March 22 policy meeting. 

Inflation jumped to 4% year-on-year in January and further to 4.5% in February from 3.3% in 2017. The impact of tax reforms, rising food and utility prices are the main reasons which we expect to continue in the coming months. 

However, Bangko Sentral ng Pilipinas's (BSP) policymakers have flagged their intention of not rushing into tightening to curb inflation. They argue that inflation would return to the target zone within the next 12 months and given the 12-18 months of policy lag, any tightening now would be ineffective anyway.

ING revises rate hike forecast
ING's economist for the Philippines, Joey Cuyegkeng expects inflation to peak within the next three to six month and expects no rate hike next week. He has also revised his forecast to no change from two 25bp rate hikes this year.

The stable monetary policy and widening trade and current account deficits will keep the Philippine Peso Asia’s underperforming currency this year.

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Our view on next week’s key events

Discover what our analysts are looking out for next week in our global economic calendars 

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