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The European Central Bank will probably cut interest rates on Thursday in a prelude to a US move the following week, as the global monetary cycle tilts toward more synchronized easing.<\/p>\n
Euro-zone officials have signaled that they\u2019ll deliver a second reduction in borrowing costs, following up on July\u2019s move, which will be scrutinized by investors looking for policymakers\u2019 intentions for any further steps later this year. At least one more cut is seen likely in 2024.\u00a0<\/p>\n
Along with the Sept. 4 rate move from the Bank of Canada, the ECB meeting\u2019s timing \u2013 days before the Federal Reserve\u2019s own initial reduction expected on Sept. 18 \u2013 underscores how large advanced economies are now shifting more in tandem as officials pivot to supporting economic growth now that they judge inflation risks to have faded.<\/p>\n
In the euro zone, easing in a\u00a0key measure of wage growth<\/a>\u00a0during the second quarter will have helped embolden policymakers.<\/p>\n Similarly, a US consumer-price report due on Wednesday may offer Fed officials reassurance that inflation pressures are stabilizing, on the heels of data on Friday that showed\u00a0US hiring fell short<\/a>\u00a0of forecasts.<\/p>\n For investors, the question hanging over this month\u2019s meetings is the extent to which such rate reductions herald a deeper easing cycle that may not only remove constriction on major economies, but also begin to stimulate them.<\/p>\n Prospects for growth will be a focus when ECB President Christine Lagarde addresses journalists on Thursday \u2014 not least in light of just-released data showing second-quarter expansion was weaker than initially reported.<\/p>\n Governing Council officials are thought to be more comfortable changing rates at meetings like the upcoming one, when they have newly-produced quarterly forecasts at hand. That would make a further cut in December more probable than one at their next gathering on Oct. 17. \u00a0<\/p>\n Elsewhere this week, Chinese inflation data, UK wage numbers and rate decisions from Pakistan to Peru are among the highlights.<\/p>\n Click here<\/a>\u00a0for what happened last week, and below is our wrap of what\u2019s coming up in the global economy.<\/p>\n Fed officials are entering a blackout period from public events before their meeting. Ahead of that, Governor Christopher Waller said after Friday\u2019s jobs report that it\u2019s important to begin\u00a0cutting rates<\/a>. Waller also noted that he\u2019s \u201copen-minded\u201d about the potential for a larger reduction. \u201cThe current batch of data no longer requires patience, it requires action,\u201d he said.<\/p>\n The labor market is on the front burner for Fed policymakers as price pressures have cooled. The August CPI report is expected to show a measure of core inflation, which strips out food and energy, rose by 0.2% for a second month. On a year-over-year basis, the core CPI probably increased 3.2%, matching the annual figure for July that was the smallest since 2021.<\/p>\n Other US data in the coming week include August producer prices, weekly jobless claims and the University of Michigan\u2019s preliminary September consumer sentiment survey.<\/p>\n Looking north, Bank of Canada Governor Tiff Macklem will speak in London about shifts in global trade and investment from a Canadian perspective, and will take questions from reporters. Meanwhile, national balance sheet data will shed light on households\u2019 net worth and debt-to-income ratio in the second quarter.<\/p>\n China is front and center, beginning with data Monday that\u2019s expected to highlight the ongoing fragility of domestic demand.\u00a0<\/p>\n Consumer inflation is seen picking up just a bit, to what would still be an anemic 0.7% pace, while declines in factory-gate prices are forecast to deepen.\u00a0<\/p>\n Data at the end of the week may add to the gloom, with growth in industrial output, retail sales and fixed asset investment all likely to have moderated in August, while property investment is seen falling at a double-digit clip for a fourth straight month.\u00a0<\/p>\n Elsewhere, Japan\u2019s economic rebound in the second quarter may be revised a tad higher after solid capital investment data for the period are factored in.\u00a0<\/p>\n India\u2019s August inflation data on Thursday could tip the Reserve Bank of India toward an October rate cut, according to Bloomberg Economics, which expects price growth to slow for a second month.\u00a0<\/p>\n Trade numbers are due during the week from China, India, Taiwan and the Philippines, and Australia gets gauges for consumer and business confidence on Tuesday.\u00a0<\/p>\n On the monetary front, Pakistan\u2019s central bank is expected to cut its benchmark rate on Thursday for a third straight meeting. Its counterpart in Uzbekistan also decides policy that day.<\/p>\n UK data may draw the attention of investors. Wage numbers on Tuesday are likely to show weaker pay pressures, though the annual pace of increase still remains more than double the Bank of England\u2019s 2% inflation target.\u00a0<\/p>\n Monthly gross domestic product on Wednesday is expected by economists to show a modest increase in July, pointing to a lukewarm start to the third quarter. And the BOE will release its latest inflation expectations survey on Friday.<\/p>\n Turning to the euro zone, industrial production numbers in Italy, Spain and the region as a whole will also point to the condition of the economy there as it began the second half of the year. Based on the performance of\u00a0Germany<\/a>\u00a0and France, in data released on Friday, it\u2019s likely the wider economy was on a weaker footing.<\/p>\n In Germany itself, Finance Minister Christian Lindner will present the country\u2019s 2025 budget to parliament on Tuesday, followed by remarks the next day by Chancellor Olaf Scholz and other government ministers.<\/p>\n Elsewhere on the continent, inflation numbers in Norway and the Czech Republic on Tuesday, and in Sweden on Thursday, will be watched closely as central bank policymakers assess the lingering strength of price pressures. \u00a0\u00a0<\/p>\n Turning south, traders will watch Egypt on Tuesday to see if inflation slowed for a sixth straight month. It reached 36% in February but has since fallen below 26%, thanks in large part to a huge international bailout.\u00a0<\/p>\n Similarly, a report on inflation expectations on Thursday will inform policymakers at the South African Reserve Bank, which uses two-years-ahead numbers to guide its decision making. A drop toward the 4.5% midpoint, where the central bank prefers to anchor them, will add impetus for its first rate cut since the height of the pandemic.\u00a0<\/p>\n Aside from the ECB, a couple of other rate decisions are scheduled:\u00a0<\/p>\nUS and Canada<\/h3>\n
Asia<\/h3>\n
Europe, Middle East, Africa<\/h3>\n
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