Overall, major central banks maintained their monetary policies unchanged, as they remain cautious over global economic growth.
On Tuesday, January 21, the Bank of Japan released the Monetary Policy Statement and the Outlook Report. The Japanese policymakers raised the economic growth forecasts, as well became carefully optimistic about the global outlook. However, the Bank still maintained the interest rate of negative 0.1%.
According to the official release: "Japan's economy is likely to continue on an expanding trend throughout the projection period - that is, through fiscal 2021 - as the impact of the slowdown in overseas economies on domestic demand is expected to be limited, although the effects of the slowdown are likely to remain for the time being."Expert commentary: Japanese Yen appreciated on raised growth forecast
Bank of Canada
On Wednesday, January 22, the Bank of Canada issued the Monetary Policy Statement and the Rate Statement. The Canadian central bank decided to keep its key interest rate target on hold at 1.75%. Also, the Canadian policymakers downgraded the economic forecast. Currently, the Bank predicts that the Canadian economy will grow by 1.6%, which is 0.1% lower than October projections.
According to the official release: "The global economy is showing signs of stabilization, and some recent trade developments have been positive. However, there remains a high degree of uncertainty and geopolitical tensions have re-emerged, with tragic consequences. The Canadian economy has been resilient but indicators since the October Monetary Policy Report (MPR) have been mixed."Fundamental analysis: Canadian Overnight Rate
On Thursday, January 23, the European Central Bank published the Monetary Policy Statement. The European policymakers decided to maintain the monetary policy unchanged. The interest rate on the main refinancing operations remained at 0.00%. The interest rates on marginal lending facility and the deposit facility also stayed at 0.25% and negative 0.50% respectively. Moreover, the ECB settled to maintain quantitative easing plan (QE) by continuing to purchase €20B of assets.Fundamental analysis: ECB Monetary Policy Statement
On Wednesday, January 29, the Federal Reserve released the FOMC Statement. As it was expected, the US policymakers decided to keep the federal funds target range unchanged at 1.50%-1.75%. However, the Fed made an adjustment by hiking the Interest Rate on Excess Reserves (IOER) by 5 basis points. The IOER is now equal to 1.6%. Note that the IOER often reflects where the funds rate trades.
According to the official release: "Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee decided to maintain the target range for the federal funds rate at 1 1/2 to 1-3/4 percent. The Committee judges that the current stance of monetary policy is appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation returning to the Committee's symmetric 2 percent objective."Fundamental analysis: FOMC Statement
On Thursday, January 30, the Bank of England issued its Monetary Policy Statement. The Bank maintained relatively low interest rate of 0.75%. Also, the British policymakers suggested that the rate cut could occur in the future if the UK economic growth stayed weak.
According to the official release:" The latest data suggest that the uncertainty facing businesses has fallen, and that global growth has stabilized. We expect uncertainty to fall further and global growth to pick up. If that happens, it should help to support growth here in the UK. If that does not happen, then we may need to lower interest rates to support UK growth and ensure that we return inflation to our 2% target sustainably."Fundamental analysis: BOE Monetary Policy Statement