The week ahead is expected to be one of the last busiest weeks for the year. With major central bank meetings lined up, including the FOMC, the ECB and the BoE, the markets could be bracing for a volatile week ahead.

The Fed’s meeting due on Wednesday is expected to see the U.S. short term interest rate rise by 25 basis points. The Bank of England the European Central Banks are however expected to remain in the sidelines.

Forward guidance from the central banks will be important in setting expectations for future course of monetary policy actions.

ECB and BoE to stay on the sidelines

The FOMC meeting will clearly overshadow the ECB and the BoE meetings this week.

Both the central banks are expected to hold interest rates steady this week. Investors will be looking to the forward guidance from both the central banks as a result.

With the ECB announcing the taper just a month ago, Mario Draghi is expected to tread a cautious line. The euro’s exchange rate has been broadly stable.

Recent communication from the ECB showed that it was comfortable with the euro’s exchange rate. As a result, the market reaction from the ECB meeting could be muted.

For the Bank of England, further rate hikes could be subject to the way how the Brexit deal progresses.

Last week the British pound surged briefly as investors expected faster rate hikes from the BoE on reports that the Brexit deal was likely.

This shows that the BoE’s forward guidance will be critical for the markets this Thursday.