Given that the ECB is set to raise interest rates by 25 bps and the BOJ is not likely to produce any surprises, the main focus will be on the Fed instead. And it doesn't come any bigger than a debate on whether policymakers will "skip" a meeting or push through with another 25 bps rate hike.
The discourse is still unsettled and as mentioned last week here, it might go right down to the wire. The US CPI data on Tuesday (and PPI data on Wednesday to some extent) will be key barometers of market sentiment on the Fed outlook, right before the Wednesday decision in itself.
Fed funds futures are showing roughly 74% odds of no change in interest rates but that can easily swing the other direction if consumer price inflation comes in hotter than estimated tomorrow.
And depending on how the Fed wants to deliver its message this week, that will have wider reverberations for markets for the remainder of the month surely.
As for the ECB on Thursday and BOJ on Friday, they might be non-events given that markets are well convinced of the outcomes they are going to deliver. The former is going to raise interest rates by 25 bps and reaffirm the need to do so again in July. Meanwhile, the latter is largely expected to keep policy unchanged but if anything else, watch out for any hawkish surprises that could catch markets off guard.
