(Bloomberg) — Central banks in the United States, the euro zone and Britain have so far raised interest rates, but central banks in northern Europe are less sure.
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On Thursday, the Riksbank could launch another quarter-point salvo and raise its key policy rate to 4.25% to fight inflation – it depends on who you listen to.
Economists and investors are divided on the outcome, with some arguing that Swedish authorities may instead choose to expand asset sales and signal the possibility of restarting interest rate hikes early next year. .
Since Eric Tedine took over as president in January, there has been unanimous agreement on interest rate decisions on all but one issue, and there is a good chance that this disagreement will spill over into the Riksbank board.
Norway’s central bank, which was the first of the 10 major currency blocs to start raising interest rates, may take some comfort from lower expectations for price increases as well as higher wages. Still, the Dec. 14 decision could lead to further tightening, especially after the recent acceleration in underlying inflation.
Compared to banks such as the Federal Reserve, the European Central Bank and the Bank of England, the Nordic countries are particularly focused on exchange rate pressures.
Swedish policymakers believe some of their efforts to curb inflation are being undermined by the unrelenting depreciation of the krona, which has made imports more expensive. Although the currency has strengthened recently, it remains susceptible to deterioration.
Similarly, in Norway, some economists are revising their view from keeping interest rates unchanged to raising them, given the weaker krone and recent consumer price data. Analysts Dane Chekov and Jetil Olsen of Nordea Bank ABP recently predicted that interest rate hikes will be in full swing in December.
One of its Nordic peers may keep rates unchanged this week, but only because so much has already been done. On Wednesday, Iceland’s central bank is expected to keep its policy rate at 9.25%, according to an independent survey of market participants. This is also the result predicted by two of the island’s largest lenders, Landsbankinn and Islandsbanki.
Policymakers were among the first developed countries to begin raising interest rates after the pandemic began, starting as early as May 2021.
Bloomberg Economics says:
“We think the Riksbank is far more likely to hold rates than raise them. This is a decision that falls outside the consensus, and most economists think this decision is delicately balanced. There is.”
—Selva Bahar Baziki, economist.Click here for complete analysis
Other highlights for next week include the minutes of central banks in the US, eurozone and Australia, the Purchasing Managers’ Index across the developed world and the UK’s financial report.
Click here to see what happened over the past week. Below is a summary of what will happen in the global economy.
us economy
The Fed will release the minutes of its last policy meeting on Tuesday. Chairman Jerome Powell suggested at a news conference after central bank officials held firm on interest rates that policymakers may remain on the sidelines as they assess the economy and inflation.
The U.S. economic calendar is light during the Thanksgiving holiday-shortened week.
Tuesday’s figures are expected to show existing home sales remain weak in October, when mortgage rates approached 8%.
The government will release weekly unemployment claims and durable goods orders for October on Wednesday.
S&P Global’s Manufacturing and Services Activity Index will conclude the week on Friday.
Asia
China is expected to keep its prime loan rate unchanged on Monday, but economists expect further rate cuts before the end of the year amid a patchy recovery in the world’s second-largest economy.
The Reserve Bank of Australia will on Tuesday release the minutes of its November 7 meeting, which decided to resume rate hikes.
Governor Michelle Bullock and Acting Director of Domestic Markets Karl Schwartz are scheduled to speak on the same day, and Mr. Bullock is scheduled to deliver his big year-end address on Wednesday.
Thailand and Singapore are scheduled to release third-quarter gross domestic product (GDP) figures on Monday and Wednesday, while Indonesia’s central bank is expected to keep interest rates unchanged on Thursday.
Elsewhere, South Korea will release early trade figures on Tuesday, providing an early update on global demand, and Japan will release the latest domestic inflation data on Friday. If price increases begin to accelerate again, this could affect the Bank of Japan’s policy.
Europe, Middle East, Africa
Bank of England Governor Andrew Bailey is expected to give evidence on Tuesday for clues about the financial outlook as British inflation subsides. He will appear alongside Lt. Governor Dave Lumsden and two other policymakers, Katherine Mann and Jonathan Haskell.
The next day, Conservative Finance Minister Jeremy Hunt is expected to use the pre-election opportunity to issue an autumn statement in a bid to extend Labour’s lead in the polls.
He is preparing a growth-focused package to increase investment and tackle issues such as labor shortages and improvements to the power grid, the people said.
Mr Hunt is also likely to extend a major corporation tax cut while imposing higher bills on big retailers and supermarkets as post-pandemic business tax relief expires.
Fiscal issues will likely be in the spotlight in the euro area as well. The European Commission is due to release its budget recommendations for EU member states on Tuesday, a key report in the weeks before the EU’s 3% deficit limit is reinstated.
Finance ministers have yet to agree on a framework for interpreting the rules and could meet just as European Central Bank officials are nervous about the lack of agreement.
The fiscal outlook is also likely to come up when ECB President Christine Lagarde appears in Berlin on Tuesday to speak with Finance Minister Christian Lindner about Germany’s history of hyperinflation.
Further comments from him are expected on Friday, with remarks from several other policymakers expected later this week.
The ECB will publish its latest assessment of financial stability risks on Wednesday, followed by minutes from its October interest rate decision the following day.
Key indicators include the Eurozone Consumer Confidence Index on Wednesday, the Eurozone and UK Purchasing Managers Index on Thursday, and Germany’s Ifo Business Confidence Index on Friday.
Elsewhere in Europe, interest rate meetings will be in the spotlight with Sweden, Iceland and Hungary also deciding to hold interest rate meetings. Budapest authorities could resist government pressure for further measures and cut the key policy rate by another 75 basis points.
In Africa, major oil producers Nigeria and Angola are expected to raise borrowing costs on Tuesday to curb inflation caused by weaker foreign currencies and the removal of fuel subsidies.
Zambia is expected to raise interest rates for the fourth consecutive time on Wednesday as Africa’s second-biggest copper producer’s currency collapses, fueling inflation.
In South Africa, data are likely to show inflation inching closer to the upper end of the central bank’s target range of 3%-6% due to rising food and transport costs. Africa’s most industrialized economy is not expected to last long and is unlikely to persuade policymakers to raise borrowing costs on Thursday.
Turkey’s central bank is poised to raise interest rates for the sixth consecutive time on Thursday after more than quadrupling them since June. Key interest rates are likely to reach close to 40%, a level investors say could enable capital to flow into the country’s bond market.
latin america
Chile’s economy expanded slightly in the third quarter after a shallow contraction in the three months to June, avoiding a technical recession due to a sustained recovery in mining, particularly the production of copper, the country’s biggest export. It is highly likely that he did.
Peru’s economy is headed in a different direction, with production declining for the third consecutive quarter year-on-year, likely due to declines in mining and construction. Latin America’s fastest-growing major economies for much of this century could shrink overall by 2023.
Sunday’s presidential election in Argentina, which gives voters a choice between Economy Minister Sergio Massa and liberal outsider Javier Millei, is likely to cast a shadow on a light economic calendar. The winner will face an economy expected to contract by 3% in 2023 while inflation exceeds 180%.
Among the plethora of data and publications from Latin America’s second-largest economy, there are three items that concern Mexico watchers the most. Economic activity likely slowed marginally at the end of the third quarter, but more importantly, consumer prices may have risen in early November.
Governor Victoria Rodríguez on November 13 made shocking excerpts from the minutes of the central bank’s November meeting, saying Banxico would not cut interest rates until the macro situation stabilized, but for the rest of the year. Not expected.
–With assistance from Piotr Skolimowski, Joe Mayes, Philip Aldrick, Vince Golle, Ragnhildur Sigurdardottir, Kati Pohjanpalo, Robert Jameson, Monique Vanek, Paul Abelsky, and Yuko Takeo.
(Updated map in first section)
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