INVESTORS will look to the U.S. Federal Reserve for reassurance in the coming week, with little economic data to assuage their concerns over the strength of the global recovery.

    The Fed, which wraps up a policy meeting tomorrow, is expected to keep steadily reducing its massive bond-buying stimulus by US$10 billion per month.

    Financial markets will be listening out for any hints on when the U.S. central bank might begin raising interest rates.

    “The Federal Reserve is preparing to move to the second step of the monetary policy exit. With the tapering of asset purchases virtually on auto pilot — QE3 is projected to end in late summer or early autumn — the focus is gradually shifting towards actual rate hikes,” Unicredit said in an investor note.

    The monetary policy outlook will also be in focus in Britain after Bank of England Governor Mark Carney stunned the markets by saying rates could rise sooner than financial markets expect.

    His comments, which put the British central bank out ahead of the world’s other major policy guardians on the monetary tightening front, pushed sterling to near five-year highs against the U.S. dollar Friday.

    The bank publishes the minutes of its June policy meeting tomorrow, which will be closely watched for signs of any further division among its members on rates, and several of its policymakers will be speaking during the week.

    Meanwhile, the European Central Bank’s (ECB) fight against deflation via interest rate cuts and measures aimed at stimulating lending to crisis-hit companies, means few expect further action from it for now.

    “The ECB has bought itself some quiet time, maybe for the remainder of this year. It doesn’t want to be pushed in to any additional movements before then,” economist at Deutsche Bank Gilles Moec said.

    Yield-hungry investors will be watching for news of a possible debt sale by Cyprus just a year after it bailed in bank depositors and imposed capital controls.

    The Bank of Japan publishes the minutes of its monthly policy meeting Friday but is not expected to have moved from an optimistic viewpoint that the country is in the midst of a virtuous cycle of employment and output growth, analysts say.(SD-Agencies)