Central bank frenzy meets political storm

(Reuters) - The week ahead is crammed with central bank decisions, first and foremost the U.S. Federal Reserve, but much of the action that whiplashed markets at breakneck speed happen on the political stage - and there's little sense that this will change. 

Here's all you need to know about the week ahead in world markets from Lewis Krauskopf in New York, Kevin Buckland in Tokyo and Dhara Ranasinghe, Alun John and Karin Strohecker in London.        

1/ NEW WORLD ORDER

World markets - and policymakers, corporates and consumers - have been left reeling as a new world order brings upheaval. 

Donald Trump's ditching of decades of U.S. foreign policy positions has shocked allies, a tariff policy targeting friends and foes alike could leave a lasting impact on trade. Some fear a "tri-partite" carve up of the world between the Washington, Moscow and Beijing is next. 

Germany's likely next leader Friedrich Merz reckons it's "five minutes to midnight" for Europe, warning a hostile Russia and unreliable U.S. could leave Europe exposed. Its parliament votes on Tuesday on a fiscal bonanza partly to increase defence spending. Meanwhile, Trump's push to get a Ukraine-Russia ceasefire over the line is intensifying. 

JPMorgan's chief economist warns lasting damage to the U.S's standing as an investment destination is at risk if Trump undermines trust in governance. 

Watch how that Wall Street selloff unfolds.  

2/ FED AHEAD

With markets becoming increasingly rickety, the upcoming Fed meeting will be all about whether the central bank is open to resuming its interest-rate cutting cycle in the coming months.

Policy makers are expected to hold rates steady on Wednesday, so investors will focus on any guidance about when the next cut might be. Fed fund futures indicate June could be the moment, with nearly three cuts baked in through 2025. 

Bets have been rising with growing concerns about the outlook for economic growth exacerbated by uncertainty stemming from Trump's tariff war.

The case for easing got a little stronger thanks to the latest tame consumer price index. But the Fed is also juggling the potential impact on inflation from new import tariffs, causing widespread uncertainty among businesses and consumers.

3/AND THERE'S MORE 

In case you didn't have enough central bank excitement, the Bank of England, Swiss National Bank, and Sweden's Riksbank are also all up. 

Markets expect the Riksbank to hold rates steady on Thursday - notable as it will likely mark the end of the easing cycle in Sweden which has been among the most aggressive of developed market central banks. 

The BoE is set to hold as well, but that's probably a breather before more easing later in the year, with much focus on the vote split between hawks and doves. 

It's a different story in dovish Switzerland. The SNB - already having the lowest rates in the G10 - is expected to cut its benchmark rate to just 0.25%, potentially fuelling more questions about whether policy makers would go back into negative territory, but that's not traders' current expectation. 

4/ GIRDING FOR A HIKE

Meanwhile, conditions are falling into place for the Bank of Japan to raise interest rates again - just maybe not quite yet. 

BOJ Governor Kazuo Ueda set the tone with hawkish comments in parliament on Thursday, predicting a steady rise in wages will transform into increased consumer spending.

Japan's heavyweight unions look set to get average pay increases of about 6% again in this year's spring negotiations, one just struck a deal for an average rise of just over 5%. 

Sources say a hike could be under serious discussion as soon as the April/May gathering, though the majority of economists see July as most likely. Meanwhile in the background is an intractable rise in superlong JGB yields over the past week to the highest since 2006.

5/ INFLATION STATIONS 

Fighting inflation remains the name of the game for almost all emerging central banks, with a number of meetings ahead. 

On a tightening push after frontrunning the Fed and other developed peers in recent years, Brazil is all but certain to deliver another 100 bps hike on Wednesday, which could take rates to a more than eight year high of 14.25%. 

South Africa's policy makers, deciding on rates on Thursday, face a challenging mix of U.S. tensions and domestic political disputes that have stymied efforts to get the country's budget over the line. Most economists expect the SARB to hold, though the direction of travel will be for lower rates.  

(This story has been corrected to remove Turkey from the last entry due to incorrect date)

(Graphics by Pasit Kongkunakornkul and Sumanta Sen, Compiled by Karin Strohecker; Editing by Toby Chopra)