As 2018 approaches, CNBC draws attention to the possible line of behavior of central banks in the United States, the eurozone, the UK and Japan in the new year.
Fed: three or more rate hikes
Given U.S. economic performance in 2017, analysts expect at least three rate hikes next year.
Andy Cates, an economist at Nomura, believes the Fed could make more increases if companies begin to increase investment, given that there is "a very good tailwind for corporate investment."
Nick Gartside, chief investment officer at JP Morgan Asset Management, said: "Fundamental factors in the US still look stable, PMI remains high, consumer confidence is growing, labor market conditions continue to show an increase to new cycle highs."
ECB: raising rates before the end of quantitative easing?
The eurozone is experiencing one of the best periods after the financial crisis, with growth rates in excess of US growth.
In the III quarter of 2017, the eurozone economy grew by 0.6% compared with the previous quarter and by 2.5% year on year.
Currently, markets do not expect interest rates to increase in 2018, and the ECB still has the opportunity to increase incentives if economic conditions change.
In October, the ECB announced a reduction in monthly purchases from 60 billion euros to 30 billion euros from January to September.
Cates from Nomura believes that core inflation in 2018 will be higher compared to central bank forecasts. If it becomes a reality, it will force the bank to increase incentives again.
However, Cates warned that political instability could negatively impact the economy. The upcoming elections in Italy in the first half of 2018 are considered a potential risk due to the growing influence of populist parties.
Bank of England: despite Brexit, two rate hikes
The Bank of England announced its first rate hike in more than 10 years in November. This happened amid strong inflationary pressures and low unemployment.
He also announced his intention to gradually tighten monetary policy in the coming years.
Thus, the markets are preparing for another rate increase next year, but Case and Gartside believe that in 2018 two rate increases can be expected.
One of the key factors for the central bank is Brexit.
At the moment, the decision of the UK to leave the EU has mainly led to the fall of the pound. However, given that negotiations are likely to continue through 2018, Cates believes that Brexit will not create economic uncertainty in the short term and BoE will be able to focus on an economy that is better than expected from the preliminary polls before Brexit.
Nevertheless, Gartside believes that it is necessary to control the situation with Brexit.
Bank of Japan: Cruise Control
Given the low inflationary pressures, the Bank of Japan is in no hurry to tighten its policy.
The short-term interest rate of the central bank is minus 0.1%, and the rate for 10-year yield on government bonds is 0%.
"As long as the current inflationary environment persists, it is unlikely that the Bank of Japan will seek to carry out rate hikes, since it is trying to avoid the appreciation of the Japanese yen," Gartside said.
Cates also added that with respect to BoJ, it is easiest to make predictions when it comes to his actions in 2018.
“No cancellation of incentives,” he said.
According to a report released in October, Japan's consumer price index in 2017-2018. grow by 0.8% – lower than the previous forecast of growth of 1.1%.