The European Central Bank is likely to advance its global monetary easing push next week, with interest rate cuts that policymakers rejected just a month ago.
A third quarter-point contraction this cycle is likely with economists predicting a longer duration acceleration Officials who want to protect the eurozone from the shock to growth caused by a long period of high borrowing costs are now acting with delay.
ECB President Christine Lagarde, at a press conference after the meeting near the Slovenian capital Ljubljana on Thursday, may be asked both on the path to further cuts and what has changed since the September meeting.
With a shorter-than-usual five-week gap between decisions, and a lack of new data, officials appear to be ignoring the bottom line on lingering inflationary pressures in favor of responding primarily to survey data pointing to a contraction in the private sector. the economy
Those reports have moved the needle in financial markets, fueling the push for a much-anticipated cut after policymakers largely agreed to a shift in bets.
The change was sudden. In the decision of September 12, the officials almost ignored a cut in October. Days laterSlovak central bank governor Peter Kazimir stated that “we will almost certainly have to wait until December” for another move, as there would be “very little new information” by October 17.
He is now the only voice he publicly argued against a move on Thursday, though other hawks could be behind the scenes.
As for what happens next, economists believe the ECB will accelerate easing to bring borrowing costs down to levels that don’t squeeze the economy by the end of 2025, according to a Bloomberg survey.
Elsewhere, data from China will show the economy remains below target, other central banks in Southeast Asia will issue rate decisions as far away as Chile and UK inflation may finally slow below 2%. The Nobel Prize in Economics will be awarded in Stockholm on Monday.
USA and Canada
U.S. reports will show how much of a boost consumers, manufacturers and homebuilders had in the final quarter of the year. Data out on Thursday is expected to show sustained growth in retail sales, underscoring persistent consumer habits.
Atlanta Fed BPGO Today, according to forecasts, the pace of personal consumption expenditures is faster, driving stronger economic growth in the third quarter.
At the same time, the Fed’s report on Thursday is expected to show a contraction in manufacturing output, pointing to a struggling manufacturing sector. And housing starts will likely signal cooler housing construction the next day.
The impact on September’s economic data from Hurricane Helene may be modest given its landfall at the end of the month. However, Helen and Hurricane Milton are expected to skew October’s data.
Fed officials next week include Christopher Waller, Neel Kashkari and Mary Daly.
Heading north, the Bank of Canada will see further cooling in core inflation in September data after the key rate reached its 2% target in August.
However, a small surprise would not put politicians off the path to easing, as they have said they expect some bumps in the road to a sustainable return to the target.
Asia
China has been the focus all week, and with growth figures ending on Friday, the economy is likely to be expanding below its annual target of 5%.
That outcome would underline why authorities took and introduced aggressive mitigation measures late last month Another salvo of help on Saturday
Beijing is due to release a slew of monthly data, including September industrial production and retail sales, along with third-quarter gross domestic product data. Real estate investment fell by double digits for the fifth month in a row.
The week starts on Sunday with figures showing China’s consumer inflation remained an anemic 0.6% in September, while declines in factory prices deepened.
Elsewhere, the Monetary Authority of Singapore issues its policy statement on Monday, while Southeast Asia takes central bank action on Wednesday.
In Manila, the Bangko Sentral ng Pilipinas plans to cut the benchmark and overnight deposit facility rates by a quarter point, while Bank of Thailand and Bank Indonesia may keep their policy settings stable.
Japan’s consumer prices are rising faster than the Bank of Japan’s target for a 27th straight month in September, and Australia receives labor statistics on Thursday that could reflect continued tightness.
Singapore’s growth likely picked up in the third quarter, according to a consensus estimate of Monday’s data. Trade data is due from China, Japan, Indonesia, India, Singapore and Malaysia, while New Zealand will release third quarter consumer price data.
Europe, Middle East, Africa
Apart from the ECB decision, the UK is likely to be a key focus, with data on wages, inflation and retail sales scheduled to be released.
Andrew Bailey, Governor of the Bank of England signaled could be open to a more aggressive approach to easing, the numbers will allow us to see if the consumer price backdrop has become benign enough to allow this.
Economists expect inflation data to weaken below the 2% target in September for the first time since April 2021.
In the Eurozone, the ZEW survey of German investors has been released at a time when the country’s government is coming to terms with itself. new announcementAdmitting that Europe’s biggest economy is likely to contract this year.
Fiscal issues could draw attention in Italy, with the budget due Tuesday evening in time for a European Union deadline. Potential updates on Italy from Fitch Ratings and S&P Global Ratings are due after the market closes on Friday.
Looking south, inflation in Israel on Tuesday, already above the official target of 1% to 3%, is expected to accelerate further as the country becomes embroiled in a multi-front conflict. Analysts expect the rate to rise to 3.7% in September from 3.6% a month earlier.
In South Africa, the Reserve Bank will publish its biennial monetary policy review, providing guidance on inflation and rate expectations. Governor Lesetja Kganyago will speak at the event.
Investors in Nigeria will see annual inflation continue to slow in September, even as price pressures have been fueled by higher fuel costs and devastating floods. Inflation is currently 32.2%.
In Namibia, the central bank will cut its key interest rate, now at 7.5%, by 25 basis points on Wednesday, following South Africa’s cut last month. The Namibian dollar is pegged to the rand, meaning monetary policy is often driven by the actions of the South African Reserve Bank.
In Turkey on Thursday, the central bank will likely keep its rate at 50% for the seventh consecutive meeting. Inflation has fallen from 75% in May to 49% in September, but officials want it to fall further before easing. Some analysts believe that policy makers will maintain the restrictions until 2025.
In Egypt, the central bank is likely to keep its key rate at 27.25% after data showed inflation accelerated for a second straight month in September. Goldman Sachs It is among the banks that anticipate reductions in borrowing costs until the beginning of next year.
Latin America
Fresher-than-expected inflation data at Chile’s rate meeting is likely to cut the rate by a quarter of a point to 5.25%. That would bring the central bank’s easing cycle to 600 basis points, with another 75 bps tapering by the end of 2025.
Among other major Latin American central banks, easing in Peru has largely tracked expectations, while actions in Brazil, Colombia and Mexico have been much weaker than consensus estimates for mid-2023.
In other central bank news, monetary authorities in Chile, Brazil and Colombia will release widely-watched expectations surveys. In addition to economists and analysts, Chile conducts a survey of traders, for Monday.
Unemployment in Peru’s capital rose to 6.1% in August, and is likely to rise again to the September reading on Tuesday, but remains near a post-pandemic low as the economy continues to add jobs.
Also on Tuesday, Colombia published August readings on industrial production, manufacturing production and retail sales. The July prints were in the black, the first scan in 17 months.
GDP proxy readings for Brazil, Colombia and Peru may show all three economies hit headwinds in July after closing the first half of the year very well.
