Gold Surges Above $3,000, Bank Of Japan To Decide On Interest Rates

The week is full of crucial monetary policy decisions expected by central banks such as the Federal Reserve (Fed), the Bank of Japan (BoJ), the Bank of England (BoE) and the Swiss National Bank (SNB). The BoJ will be the first one to announce its decision tomorrow Wednesday.

Gold surged above $3,000 per ounce, hitting a record high, on the back of geopolitical tension in the Middle East while the US dollar index trades near a five-month low. Deutsche Bank’s analysts said that “investors continue to rotate away from the US dollar and find perceived safe havens amidst the heightened policy uncertainty.”

Please note that this material is for informational purposes only and not financial advice.

Bank of Japan Interest Rate Decision

On Wednesday, the BoJ governing board will announce its interest rate decision. Economists suggest that Japan’s central bank will keep interest rates unchanged after the upcoming meeting. Market analysts suggest that the BoJ could move forward with two rate hikes of 25 basis points in May and July, further tightening its monetary policy.

Commenting on the rate decision due this week, analysts at Standard Chartered noted that borrowing costs would remain on hold to ensure financial stability. In their note to investors, they wrote: “We expect the Bank of Japan (BoJ) to keep rates unchanged on 19 March, primarily to support financial stability and avoid any premature tightening, which could weaken domestic spending. The central bank is likely to gradually hike rates starting Q2-2025, which would help address inflationary risks without undermining growth, in our view. Q4 GDP grew an annualised 2.2%, driven by exports, but domestic demand remained weak. Past instances show that rate hikes by the BoJ have led to economic slowdowns, notably in the 1990s and in 2007. We, therefore, expect the BoJ to hold rates in March before cautiously tightening in Q2-2025. A sudden hike could also unwind JPY carry trades, disrupting global markets.”

US Retail Sales Miss Estimates

US retail sales for February 2025 rose by 0.2% month-on-month in February, according to a report released by the US Census Bureau. The figure was lower than the 0.6% growth expected. The report was the last significant set of market data just two days before the Federal Reserve’s monetary policy meeting.

Bank of America economists told Yahoo Finance that “we kind of bounced back from that low January, and we're right back where we were in December. Until you see cracks on the labour market side, you're just not really going to see a big slowdown on the consumer overall."

Speaking to The Guardian reporters, some economists wondered if the latest weak sets of data coming from the US economy could justify further rate cuts by the US central bank while trade tariffs could boost inflation figures.

OECD Revises Growth Forecasts Lower

The Organisation for Economic Co-operation and Development (OECD) revised global economic growth forecasts lower than previously estimated suggesting that “global GDP growth is projected to moderate from 3.2% in 2024, to 3.1% in 2025 and 3.0% in 2026, with higher trade barriers in several G20 economies and increased geopolitical and policy uncertainty weighing on investment and household spending”. A similar OECD report in December had forecast that global economic growth would come in at 3.3% in 2025 and 2026. OECD analysts suggested that “annual GDP growth in the United States is projected to slow from its strong recent pace, to be 2.2% in 2025 and 1.6% in 2026.”

The report underlined the role of uncertainty when it comes to trade policies and the implementation of restrictions that could act as headwinds in the future. According to the OECD, “core inflation is now projected to remain above central bank targets in many countries in 2026, including the United States. Certainly, if inflation expectations remain anchored, we do believe that in even major economies like the United States and the United Kingdom, there is scope for further policy easing”.

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