(Bloomberg) – Underlying price pressures in the U.S. appear to be on pace to confirm concerns from Federal Reserve officials, which suggests efforts to fight inflation are all clear.
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The consumer price index, which excludes food and fuel, which economists prefer as a better indicator of underlying inflation, is expected to rise 0.3% for the third straight month.
Compared to October last year, core CPI is expected to rise by 4.1%. This is in line with the annual rate of increase in September and puts an end to the six-month slowdown in price growth.
Although considerable progress has been made since hitting multi-decade highs a year ago, the pace of inflation is still rising and outpacing the Fed’s target. Although they have paused tightening in successive meetings and left the benchmark interest rate at the highest level in 22 years, policymakers have continued to tighten deliberately and have not ruled out further rate hikes.
“We will not hesitate to tighten policy further if it becomes appropriate,” Chairman Jerome Powell said Thursday. “However, we will continue to tread carefully so that we can counter both the risk of being fooled by a few months of good data and the risk of overtightening.”
Read more: Fed Chairman Powell says Fed needs to be cautious and won’t hesitate to raise rates if necessary
Central bankers scheduled to speak next week include Chicago Fed President Austan Goolsby and Fed President Philip Jefferson.
Tuesday’s CPI report is the first of the key U.S. indicators to provide a glimpse into the economy’s performance early in the fourth quarter. Retail sales data on Wednesday is expected to show consumers cut back on spending in October after continuing solid month-on-month growth.
Reports later in the week are likely to show declines in industrial production and housing starts.
Looking north, Canada is scheduled to release home sales statistics for October after home prices fell for the first time in six months in September under the weight of rising interest rates.
Bloomberg Economics says:
“In our view, Fed officials will most likely maintain a tightening bias until monthly core CPI has been consistently at a 0.2% to 0.3% pace for at least six months. At the lower end of this range. was a one-summer phenomenon, and since then core CPI has been creeping towards the upper bound, which is more in line with a 3% annual inflation rate than a 2% annual inflation rate.”
— Anna Wong, Stuart Paul, Eliza Winger, Estelle Wu, economists.Click here for complete analysis
Elsewhere, China’s economic report, data that could point to a recession in Japan, slowing inflation in the UK and new regional forecasts for Europe will be of interest.
Click here to find out what happened last week. Below is a summary of what will happen next in the global economy.
Asia
The APEC meeting is being held all week, with US President Joe Biden and Chinese leader Xi Jinping scheduled to meet in San Francisco, and is likely to be a closely watched event for investors around the world.
China is expected to keep its one-year medium-term lending facility rate unchanged at 2.5% on Wednesday and report a wide range of data from industrial production to retail sales growth, providing an update on the current situation in the world’s second-largest economy.
Japan’s third-quarter gross domestic product (GDP) data to be released on the same day is expected to show the economy has fallen into contraction again after a stronger-than-expected second quarter, while trade data will be released on Thursday. is scheduled to be announced.
Australia’s acting central bank governor, Marion Kohler, spoke on Monday, saying Tuesday’s figures are likely to show business confidence is holding up better than households amid rising interest rates.
Across the Tasman Sea, Reserve Bank of New Zealand assistant governor Karen Silk is scheduled to address the bank’s balance sheet on Tuesday.
Elsewhere in the region, Sri Lanka is likely to raise taxes in its budget on Monday to meet the terms of the International Monetary Fund’s $3 billion bailout program, while India’s October inflation pace will be lower than the central bank’s target. It is expected to slow further into the range.
The Philippine central bank is expected to announce its latest policy decisions on Thursday, while Malaysia will release its final third-quarter GDP data on Friday.
Europe, Middle East, Africa
The UK data will be of interest. Tuesday’s wage data could show some softening, while the next day’s inflation rate is likely to slow from the fastest rate among G7 countries to its lowest level in two years.
Both results would confirm the view of Bank of England chief economist Hugh Pill that further interest rate hikes are not necessary. Governor Andrew Bailey on Wednesday rejected the prospect of an early interest rate cut, days before data was released showing the economy stalled in the third quarter, although a recession had been halted.
In Brussels, new European Union forecasts will be released on Wednesday, marking a revised outlook, with the region’s economic contraction likely to widen. The announcement will also include fiscal forecasts, which will become even more important given the reinstatement of the bloc’s 3% deficit rule in 2024.
Officials are particularly concerned after the Italian government announced a fiscal easing stance. Moody’s Investors Service has a negative outlook on the country’s investment grade rating and indicated on Friday it may update its view.
Along with industrial production for September, revised figures for euro area GDP and inflation will also be released.
Among the flurry of speakers from the European Central Bank, President Christine Lagarde will be in the spotlight for her remarks at Friday’s conference.
Looking north, Swedish inflation will be the focus of investors’ attention on Tuesday. National bank officials may ignore the possibility of accelerating CPIF measures, which they are targeting.
In the East, the third quarter GDP announcement will be the center of attention. Poland is also set to release figures, with the Hungarian economy under Prime Minister Viktor Orbán on the brink of emerging from a year-long recession.
Russian figures on Wednesday are likely to show the economy continues to recover despite international sanctions over the invasion of Ukraine, expanding perhaps by more than 5% and at its fastest pace since the start of the war.
Also on Wednesday, investors will get their first look at how the war with Hamas is affecting Israeli prices. Analysts surveyed by Bloomberg expect inflation to fall further last month to 3.7%.
Read more: War budget leaves Netanyahu caught between markets and politics
In Africa, Ghana’s Finance Minister Ken Ofori-Atta is scheduled to unveil his 2024 budget on Wednesday, which will include plans to rein in debt and raise revenue as part of the terms of a $3 billion IMF bailout. . Statistics on the same day showed that inflation is expected to slow for the third straight month to 36% in October.
Nigeria’s naira remains weak, with annual inflation likely to accelerate to more than 27% in October from 26.7% in the previous month.
latin america
Argentina’s final economic announcement before it elects a new president is likely to show government data showing annual inflation exceeded 145% last month. Economists surveyed by the central bank expect it to rise again in November and December and end the year at 181%.
Chile’s central bank on Tuesday published the minutes of its Oct. 26 decision to slow the pace of easing. The Board cited deteriorating global financial conditions and increasing global geopolitical uncertainty that is hurting the peso.
Peru’s gross domestic product (GDP) proxy data on Wednesday showed the economy contracted for the third consecutive quarter in the three months to September as domestic demand remained weak and China’s woes weighed on exports. You should check.
Brazil’s GDP proxy data for September may show growth has slumped as 2023 faces surprises. Consumers in Latin America’s largest economy are feeling the hit of double-digit interest rates, but government spending, federal aid to low-income households and a tight labor market are helping. to support demand.
In Colombia, the focus will be on third quarter production. Analysts see the past three months’ recovery as staving off a technological recession, and predict that only Brazil and Mexico will grow faster in 2023 among the region’s large economies.
–With assistance from Laura Dillon Cain, Piotr Skolimovsky, Monique Vanek, Paul Wallace, Robert Jameson, Yuko Takeo, and Tony Halpin.
(Latest information on Israel in EMEA section)
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