It will be a busy week in the US with the Fed Interest rate decision and the CPI report taking central stage. Also, the Bank of England, the European Central Bank, the Swiss National Bank, and the Bank of Mexico will hold monetary policy meetings and UK, India, and South Africa will release inflation data. Investors will also follow ZEW Economic Sentiment for Germany and retail sales and industrial production for China. Finally, flash PMI readings will be released for major developed economies including the US, UK, Euro Area, and Australia.
In the US, the annual inflation is seen slowing to 7.3% in November, while the monthly CPI is set to rise only 0.3%. At the same time, core CPI likely rose 6.1% year over year, the least in 4 months. Meanwhile, Fed policymakers are set to raise rates by 50 basis points next week, following four consecutive 75 bps hikes. But if inflation continues to ease, only a 25bps rate increase could be considered in January. The US central bank will also release quarterly forecasts for inflation, the economy, and the future path of interest rates. The upcoming week also features the retail sales report, with forecasts pointing to a 0.1% month-on-month drop, suggesting that tighter financial conditions are denting consumer demand. Other releases include the S&P Global manufacturing and services PMI, export and import prices, industrial production, and Philadelphia Fed Manufacturing Index.
Elsewhere in America, Canada will publish the latest housing starts data and the new housing price index for November. Brazil will report business confidence numbers, while Mexico’s Central Bank will announce its monetary policy decision.
In Europe, all eyes will be on the ECB interest rate decision, with markets expecting a smaller 50bps hike, following two consecutive 75bps rate increases. Investors will also keep a close eye on new macroeconomic projections. The Swiss National Bank, the Norges Bank, and the Central Bank of the Russian Federation will also give an update on monetary policy. Meanwhile, preliminary PMIs for the Eurozone, Germany, and France will provide an early update on the private sector activity this month, with forecasts pointing to another contraction for both services and manufacturing. It will also be interesting to follow: the Zew Economic Sentiment for Germany; final inflation figures for the Euro Area, Germany, France, Italy, and Spain; industrial production for Italy and the Euro Area; and inflation rate and final estimates for Russia’s GDP growth for Q3. On the political front, investors will keep a close eye on any developments on the EU gas price agreement ahead of a ministerial meeting Tuesday. The current proposal being discussed is a cap of €220 per megawatt hour.
In the UK, the BoE is expected to announce a 50bps rate hike in the benchmark bank rate on Thursday, after a jumbo 75bps increase in the previous meeting, which was the biggest increase in borrowing costs in 33 years. Other key economic releases include the monthly GDP for October, with market forecasts pointing to a 0.4% rebound after a 0.6% contraction in September. Inflation figures will also be in the spotlight, with the annual rate set to fall to 10.9% from 1981-highs of 11.1%. Industrial production, unemployment rate, earnings, retail sales, the GfK consumer confidence, and flash PMIs for December are also due.
In Asia, all eyes will be on Chinese industrial production and retail sales data for November for further insights into how strict Covid lockdowns affected the economy. Other releases include the unemployment rate, housing prices, and fixed investment for the period. In Japan, the focus will be on the Tankan Manufacturers Index, foreign trade data, and flash PMI figures. In India, the balance of trade and industrial production growth are awaited along with retail inflation for November which is expected to slow but remain above the RBI’s upper target of 6% for the 11th month. Elsewhere, investors look forward to a series of rate-setting central bank meetings expected to mirror the Federal Reserve’s decision. In Australia, investors will follow: Westpac consumer confidence, flash PMI prints for December, NAB business confidence, and employment reports for November. In New Zealand, the focus will be on Q3 GDP growth data and November PMI.