What’s Next for Commodity Prices as 32-Hour Monetary Policy Spree Looms Over Market

And guess what? This week is about one thing and one thing only: It’s all about global monetary policy with a trio of the world’s “Big 3 Central Banks” due to announce interest rate decisions in a whirlwind 32-hour window.

This 32-hour sequence of global monetary policy setting spanning from Tokyo and Washington on Wednesday and London on Thursday – will ultimately determine the tone for the 2nd half of 2024.

This week trader’s attention will be firmly focused on the outcome of the Federal Reserve, Bank of England and Bank of Japan’s monetary policy decisions as each face different challenges relating to inflation, employment and economic growth.

Fed Watch: Rate Cut Expectations Take Center Stage

Taking front and centre stage this week will undoubtedly be the Federal Reserve – especially as expectations are running high that the Fed could be on the verge of announcing their first rate cut.

Ever since the Federal Reserve signalled that the rate-rising phase of its historic fight against inflation was over, attention has been focused on when – and how quickly – the U.S Central Bank would lower interest rates from their current 23-year high of 5.25 to 5.5%.

The answer to this question may come from the hotly awaited FOMC Monetary Policy Meeting on July 30-31.

While the Fed is widely expected to keep interest rates on hold again this week – two influential Fed policy makers have highlighted their support for a rate cut in the coming months.

Federal Reserve Governor Christopher Waller – one of the central banks most influential voices and John Williams, president of the New York Fed – both said that rate cuts from the central bank will soon be appropriate following improved inflation data and fresh signs that the labour market is cooling off.

The Fed has kept is benchmark policy rate unchanged since last July, but traders have significantly increased bets that the Federal Reserve will cut borrowing costs by a quarter point twice before the end of 2024.

Bank of England Set to Break Tradition with Rate Cut?

Elsewhere, the Bank of England has held interest rates at a 16-year high of 5.25% since August last year. However according to analysts at GSC Commodity Intelligence – the UK’s central bank could deliver its first rate cut on Thursday.

A cut would put the Bank of England ahead of the Federal Reserve, which is expected to lower rates in September, but behind the European Central Bank which made its first cut in June.

Historically, the Bank of England and the European Central Bank have both never cut interest rates before the U.S Federal Reserve.

Should the Bank of England follow in the footsteps on the ECB this week and break away from its long-standing tradition of being among the last to move to among one of the first – this could potentially mark the beginning of a ‘new era’ for macro traders.