The key event today will be the Fed announcement and new projections at 19:00followed by Janet Yellen’s debut as host of the press conference at 19:30. We expectthe Fed to taper its assets purchases by USD10bn, taking monthly purchases down toUSD55bn. We also see only moderate revisions to its forecasts. The Fed is likely tomention the recent economic weakness in the statement, highlighting bad weather asthe most important factor. Some key figures for February and March have been a bitbetter than expected and the Fed will take some comfort in that. At the pressconference, we believe Yellen will reiterate that it will take a notable deterioration ofthe 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 onthe 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 labourmarket report which will probably show another month of decline in the number ofjobless. 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 stillquite unpredictable and should be followed closely.
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Danske Bank