Significant decisions expected from Central banks - OPINION

December 12, 2017 12:23

Baku. 12 December. REPORT.AZ/ This week, five major central banks, including the US Federal Reserve System (Fed) and the Central Bank of the Republic of Turkey (CBRT) will hold a meeting on monetary policy.

Report informs, discount rate may change after Fed meeting today and tomorrow and also meeting of the Central Bank of the Republic of Turkey (CBRT), the European Central Bank (ECB), the Bank of England (BoE) and the Swiss Central Bank (SNB) on December 14.

Analytical Group of Report News Agency believes, attention of global financial market is focused on Fed's decision. Thus, it is expected that tomorrow the Fed will increase discount rate by 0.25% up to 1.25-1.50%. As the decision is already supposed by the financial market, sharp strengthening of the U.S. dollar not expected.

However, two days later, on December 14, the ECB is not expected to make change in monetary policy, resulting in a gradual boost in bonds between the US and the eurozone.

Notably, discount rate in Eurozone is 0%. The USD / EUR rate is likely to remain within the range of 1.14-1.21 within the next 6-9 months.

Another important meeting for Azerbaijan and developing countries will be held by the CBRT.

CBRT, which for a long time did not want to increase its discount rate for political reasons, signaled that, it could increase rate at a meeting on December 14 as U.S. dollar rate reached 4.00 liras. Analytical Group of Report expects increase by 0,5% or 0,75%. This will not lead to a decline in U.S. dollar rate sufficiently.TRY / USD exchange rate is expected to reach 4.00 again.The CBRT's failure to increase interest rates sharply will be its desire to keep impact tool during possible crises in the future.

At BoE and SNB meetings scheduled for December 14, it is expected that the rate will remain constant.As a result, the currencies of these countries are expected to decline slightly compared to the dollar.The USD / GBP rate will drop to 1.30 and the USD / CHF may gradually decline to about 0.98.