There is talk, however,that the SNB might consider intervention to restrain the franc, which hit a nine-year high on the euro last week.
The ECB meeting is also shaping up to be an eventful one, given that inflation has slowed enough for even arch-hawk Isabel Schnabel to take a sudden dovish turn.
Analysts assume other hawks, led by the Bundesbank, will push back against market pricing for cuts starting in March or April, but it’s an open question whether they will be in the majority.
As for the Fed, the initial focus will be on the FOMC “dot plots” for rates and whether they will stick to 50 basis points of easing next year or nudge that higher. The last plots also had 125 basis points of cuts for 2025 and another 100 basis points the year after.
Attention will then turn to Fed Chair Jerome Powell’s media conference where he will have an opportunity, should he choose, to push back against market pricing for early cuts.
Markets have already pared pricing for a March easing to 46% following last Friday’s upbeat payrolls report, while a May cut is put at a 58% chance and around 100 basis points of easing is implied for all of 2024.
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