Doubly masterful inactivity
- The Bank of Japan did nothing on policy (bar some earthquake related relief) even as it revised growth and inflation projections lower. One reason may be the rampant inflation expectations of consumers, which may increase further with any easing.
- The US Federal Reserve did nothing on policy (which was not a surprise) though seemed less inclined to fret about international developments. This is odd – not because there are global growth risks, but because there have been few global growth surprises since the last FOMC.
- US Q1 GDP is due (note 75% of US GDP data has been revised higher since the start of 2010). There are questions about seasonal adjustment, and questions about the expected inventory correction (in an environment of higher inter-company credit).
- The UK Chancellor is to testify to Parliament on the UK referendum on EU membership. German and Spanish inflation figures are due – the seasonal adjustment process does not cope well with price discounting around Easter, as Easter is a moveable feast.