Analysis of economic data in the coming week

The Week Ahead: FOMC, BOE, ECB and CPI A Busy Week Ahead of the Christmas Holidays

FOMC

Federal Reserve meets this week on Wednesday. According to the CME FedWatch tool, markets are expecting a 75 percent chance of a 50 basis point rate hike at the meeting. In his speech at the Brookings Institution on Nov. 30, Federal Reserve Chairman Powell made several comments suggesting the Fed could raise rates by as little as 50 basis points at this week’s meeting.

Core CPI is expected to decline from 6.3% per year to 6.1% per year. If actual reports match forecasts, we can expect a 50 point increase. However, the Federal Reserve will also publish its “point-to-point” inflation rate, which includes forecasts for inflation, economic growth and interest rates.

BoE

The Bank of England will hold an interest rate meeting on Thursday of this week. At its last meeting, the BoE raised interest rates by 75 basis points to 3.00%. The bank said that rates would have to rise to bring inflation back to target, and also said that the final rate would be lower than what the market had expected. Bank of Britain members also pointed out that the UK is on the verge or in the midst of a prolonged 2-year recession.

ECB

The European Central Bank will also announce interest rate changes at its interest rate meeting on Thursday of this week. In its last meeting, the European Central Bank raised interest rates by 75 basis points to bring the borrowing rate down to 2.00 percent. The European Central Bank stated that it will continue to raise interest rates because inflation is so high and consistently above forecasts.

As mentioned earlier, the UK will release its GDP and inflation data before the BOE meeting. In addition, the retail sales index will be released on Friday. In the U.S., CPI, the Philly Fed Manufacturing PMI and retail sales will also be released this week. China will release some less important economic data on Thursday. On Friday, the preliminary global PMI reports from the Eurozone, the UK and the US for December will be published.