BOJ Policymakers Warn Weak Yen Could Fuel Inflation Risks and Delay Rate Action 
Bank of Canada Holds Interest Rate at 2.25% Amid Trade and Global Uncertainty 
RBA Expected to Raise Interest Rates by 25 Basis Points in February, ANZ Forecast Says 
ECB Signals Steady Interest Rates as Fed Risks Loom Over Outlook 
BOJ Rate Decision in Focus as Yen Weakness and Inflation Shape Market Outlook 
Markets React as Tensions Rise Between White House and Federal Reserve Over Interest Rate Pressure 
U.S. Prosecutors Investigate Fed Chair Jerome Powell Over Headquarters Renovation 
China Holds Loan Prime Rates Steady in January as Market Expectations Align 
Yesterday’s price action post FOMC announcement strongly suggest that the market is more focused and more concerned about the future actions of the European Central Bank (ECB) that the U.S. Federal Reserve.
Yesterday’s policy action, statements, and projections - all were very hawkish; Federal funds rate was increased by 25 basis points along with other rate benchmarks, Fed projected increased growth, higher inflation, lower unemployment, and higher Federal funds rate. Despite that, the U.S. dollar declined against all its major counterparts, especially the euro only after a brief rise. The euro immediately declined after the FOMC announcement from 1.179 against the USD to 1.172 area, but recovered grounds since then and is currently trading 1.183 area.
With Fed, the market is pretty clear that the Fed will hike twice more this year and thrice next year with a constant reduction in its balance sheet. But, with ECB, the market is not certain about the timing of the QE end, tapering projections, and interest rate projections. We believe that market is increasingly focused on the ECB meeting, which is today, as the current bond-buying program of €30 billion per month will expire in September this year.
