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Fed, BOJ, RBA meet but no action expected by economists

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Central bank decisions are due out of the U.S., Japan and Australia this week, but most analysts aren't convinced the time is right for rate moves.

"The week ahead is loaded but may be of little consequence, merely firing blanks," Vishnu Varathan, senior economist at Mizuho Bank, said in a Friday note.

The Federal Reserve

The Fed will convene for a two-day meeting on November 1, and market expectations remain largely dovish, despite recent supportive economic data.

Third-quarter gross domestic product (GDP) reported on October 28 beat forecasts to rise 2.9 percent on-year, the fastest pace of growth in two years. Meanwhile, nonfarm payrolls have continued to show moderate strength, while inflation indicators suggested the return of inflation pressures.

But the heated political climate ahead of the presidential elections will keep the Fed on hold this week, in order to avoid disrupting markets further, market-watchers said.

"Obviously November has been ruled out for the Fed given that it is so close to the U.S. elections," Divya Devesh, Asia FX strategist at Standard Chartered Bank, said, adding that he forecast a 60 percent chance the Fed could skip a rate hike entirely in 2016.

But Barclays' economists said a December rate move was still on the table.

"We remain focused on December and continue to believe that incoming data on labor markets and inflation will tip the balance in favor of a rate hike by then. That said, we are unsure about the amount of progress needed to push the committee to action," the economists said on Friday in a weekly note.

Bank of Japan

The Bank of Japan's two-day "Halloween meeting" - it starts on October 31 - is unlikely to produce any market scares.

The BOJ had announced in September that it would make "yield curve controls" the linchpin of a new policy framework and move away from continuously expanding the monetary base.

And BOJ Governor Haruhiko Kuroda told parliament last week that there was no urgency for further easing, although the central bank might have to extend its inflation target deadline, Reuters reported.

"The focus of the discussion is likely to be the effectiveness of the policy tool and its implementation strategy. Fortunately, the ongoing depreciation of the yen will allow the BOJ to stay on hold," said Kohei Iwahara, Japan economist at Natixis, in a Friday note.

Iwahara said, however, that the central bank was expected to revise its inflation target outlook from FY17 to FY18 as core Consumer Price index was still soft..

Reserve Bank of Australia

The Reserve Bank of Australia, under new Governor Philip Lowe, is expected to keep cash rates unchanged when it announces its decision on November 1.

"Although labor market conditions have been a touch softer lately and bear close monitoring, leading indicators remain consistent with moderate employment growth in the months ahead," Goldman Sachs economists wrote in a Friday report.

"More importantly, inflation in 3Q16 surprised market expectations to the upside and there is also now clearer evidence that the peak disinflationary period has passed and that we are at a positive inflection point," they said.

The heated property market in major Australian cities were also a concern for the RBA, as rising household debt could pose a risk to financial stability in the longer-term, said economists at Moody's Analytics in a Friday note.

The Australian central bank will release its November monetary policy statement on Friday, which will provide hints on any future rate moves.

Bank of Thailand

The Bank of Thailand is expected to keep rates steady at a record low of 1.5 percent on November 4, the level it has held since April 2015.

But the central bank could "signal its willingness to lower interest rates further if there is a substantial deterioration in the economic outlook," Moody's Analytics wrote.

"We expect the junta government to announce further fiscal stimulus measures to support consumption," Moody's added.

The Southeast Asian country announced a year-long of mourning after the death of King Bhumibol Adulyadej on October 13, and a 30-day ban on any "joyful events" including festivals, parties and concerts. This was expected to hit the country's tourism, hospitality and entertainment industries, but only in the short term.

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