Stagflation Concerns Amid Hopes for Monetary Policy Easing… Attention on Fed, BOJ, PBOC Decisions

## Market Focuses on Central Bank Policies Amid Stagflation Concerns The market's attention is sharply focused on the upcoming monetary policy decisions by major central banks, including the U.S. Federal Reserve, Bank of Japan (BOJ), and People's Bank of China, as concerns about stagflation (rising inflation amid economic downturn) spread. On March 14, Daishin Securities' analyst Lee Kyung-min projected, "The Federal Open Market Committee (FOMC) meeting on March 20 is not expected to bring immediate rate changes, but market attention will be on Chairman Powell's assessment of recent administrative policies' impact on the economy and the implied direction of future monetary policy." Indicators of weakened consumer sentiment in the U.S. are evident. Both the February Consumer Price Index (CPI) and Producer Price Index (PPI) fell short of expectations, indicating potential for the Federal Reserve to consider rate cuts in response to these economic slowdown signals. Although the FOMC meeting on March 20 is anticipated to maintain current rates, Chairman Jerome Powell's press conference could provide insights into future monetary policy direction. Market expectations currently include the possibility of up to three rate cuts by the Federal Reserve within the year. China's potential for monetary policy easing to stimulate the economy is also high. Should the upcoming indicators for retail sales, industrial production, and fixed asset investment, due on March 17, prove disappointing, discussions of a rate cut at the People’s Bank of China's meeting on March 20 could ensue. Recent recovery signs in China's semiconductor market may bolster this sector, positively affecting the domestic stock market. In Japan, attention is set on whether the BOJ will adjust its monetary policy direction at its meeting on March 19. The yen's current strength has raised the potential for unwinding yen carry trades, which could heighten financial market volatility. However, if the BOJ adopts a more hawkish stance than anticipated, the yen's strength is likely to persist. Lee Kyung-min of Daishin Securities commented, “Amid stagflation concerns, the likelihood of monetary policy easing by major central banks is increasing,” suggesting it is “an opportune time to consider increasing weight in sectors such as semiconductors, banking, and insurance.”