As the Fed steps back after its December rate cut, attention turns to the Bank of England (BoE), European Central Bank (ECB), and Bank of Japan (BoJ) this week, with expectations for a BoE rate cut, a steady ECB, and a gradual BoJ hike amid resilient global growth and cautious central bank policy, BNP PARIBAS's economists note.

Resilient growth keeps banks cautious

"While the Fed eased its monetary policy on 10 December for the third consecutive FOMC meeting, without making any guarantees about future action, the BoE, the ECB and the BoJ are holding their respective meetings this week."

"The BoE is expected to cut its key interest rate, the ECB to keep it steady, and the BoJ to raise it. These decisions come amid resilient growth performance despite shocks, which should lead central banks to remain cautious, whether in terms of easing (a residual cut expected for the BoE and none for the ECB) or raising key rates (which should remain a gradual process in Japan)."

"This climate of monetary policy neutrality could be accompanied by greater pressure on long-term sovereign rates than during the period of monetary easing."