US and EU banks were buoyed by central bank announcements in the final weeks of 2016. The Federal Reserve lifted rates by 25 basis points and hinted at up to three hikes this year. Meanwhile, the European Central Bank (ECB) extended the timeline for its quantitative easing (QE) programme but reduced monthly purchases from €80bn to €60bn.
All eyes are now on Bank of Japan (BoJ), the architect of QE, which took the bold move of cutting rates to negative early last year. At its December 2016 meeting BoJ held rates steady, but raised its economic forecast. If BoJ follows the lead of its US and EU counterparts, the country’s biggest lenders are among those that would benefit most.
