*

Asian stock markets : https://tmsnrt.rs/2zpUAr4

*

Nikkei bounces, S&P 500 futures edge higher

*

Markets brace for BOJ to end negative rates

*

Fed seen on hold, but might signal slower rate cuts

*

Dollar keeps gains, yen on defensive for now

By Wayne Cole

SYDNEY, March 18 (Reuters) - Asian shares idled and the

dollar held firm on Monday as investors looked to navigate a

minefield of central bank meetings this week that could see the

end of free money in Japan and perhaps a slower glide path for

U.S. rate cuts.

Central banks in the United States, Japan, UK, Sweden,

Switzerland, Australia, Brazil and Mexico all meet and, while

most are expected to hold steady, there is plenty of scope for

surprises.

Tuesday could see the end of an era as the Bank of Japan is

now widely tipped to end eight years of negative interest rates

and cease or amend its yield curve control policy.

The Nikkei newspaper on Saturday became just the latest

media outlet to flag the move, after major companies granted the

biggest pay hikes in 33 years.

There is a chance the BOJ might wait for its April meeting

given it will be issuing updated economic forecasts then.

"Whether or not it is March or April, we suspect the

language accompanying any such move will carry a cautious tone,

emphasising it more as a monetary policy adjustment rather than

a tightening at this stage," said Carl Ang, a fixed income

analyst at MFS Investment Management.

"For Japan a measured and gradual path of policy

normalisation appears appropriate for an economy unaccustomed to

higher rates and thus the policy messaging will be critical."

Markets also assume the BOJ will hike at a snail's pace and

have a rate of 0.27% priced in by December, compared with the

current -0.1%.

That might be one reason the yen actually lost ground last

week, with the dollar gaining 1.4% to trade at 149.00 yen

. The euro stood at $1.0883, having eased

0.5% last week and away from a top of $1.0963.

Japan's Nikkei bounced 0.8%, having shed 2.4% last

week as a run up to record highs drew some profit taking.

MSCI's broadest index of Asia-Pacific shares outside Japan

eased 0.1%, after dipping 0.7% last week.

Chinese data on retail sales and industrial output for February

due later Monday are potential hurdles for the market.

S&P 500 futures and Nasdaq futures were both

up 0.1%, with tension building ahead of the Federal Reserve

policy meeting in Tuesday and Wednesday.

COUNTING THE DOTS

The Fed is considered certain to keep rates at 5.25-5.5%,

but there is a possibility it might signal a higher for longer

outlook on policy given the stickiness of inflation at both a

consumer and producer level.

"We now expect 3 cuts in 2024, vs. 4 previously, mainly

because of the slightly higher inflation path," said Goldman

Sachs economist Jan Hatzius in a note.

He still expects the Fed will start in June, assuming

inflation eases again as expected, and officials will stick with

their dot plot forecasts of three cuts this year.

"The main risk is that FOMC participants might instead be

more concerned about the recent inflation data and less

convinced that inflation will resume its earlier soft trend,"

Hatzius cautioned. "In that case, they might bump up their 2024

core PCE inflation forecast to 2.5% and show a 2-cut median."

The Fed is also expected to begin formal discussion of

slowing the pace of its bond sales this week, perhaps halving it

to $30 billion a month.

Bonds could do with the support given the damage done by a

run of uncomfortably high inflation readings. Two-year Treasury

yields are up at 4.723%, having climbed 24 basis

points last week, while 10-year yields stood at

4.315%.

The probability of a rate cut as early as June has

dropped to 55%, from 75% a week earlier, and the market has only

72 basis points of easing priced in for 2024 compared to more

than 140 basis points a month ago.

The Bank of England holds its meeting on Thursday and is

expected to stay at 5.25%, while markets see some chance the

Swiss National Bank might ease this week.

The ascent in the dollar and yields took some shine off

gold, which was idling at $2,155 an ounce, having fallen

1% last week and away from all-time highs.

Oil prices have had a better run after the International

Energy Agency raised its view on 2024 oil demand, while the

supply outlook was clouded by Ukrainian strikes on Russian oil

refineries.

Brent was off 3 cents at $85.31 a barrel, while U.S.

crude was flat at $81.04 per barrel.