They say it’s rarely about just one data point. But the coming week may be an exception to the rule as markets zero in on the latest US inflation data released on Tuesday. This is the last major economic release ahead of the FOMC meeting on 21 September and comes during the Fed’s blackout period when central bank officials do not comment on monetary policy.
The CPI core reading will probably give a truer read on the current pace of price pressures and the risks ahead. This is because the headline print will be weighed down by the rapid drop in oil prices. But it seems only a huge surprise could push markets back to the 50bp rate hike. They currently see over an 85% chance of another 75bp move.
The UK is observing a period of mourning following the death of Queen Elizabeth II. The Bank of England meeting originally scheduled for Thursday has been postponed until the following Thursday 22 September. But we still currently have the usual mid-month data dump including GDP, jobs numbers, CPI and retail sales.
The announcement of an energy price cap by the new UK Prime Minister cuts the chance of a more prolonged downturn and possibly a technical recession. Economists reckon inflation will be lowered by around 4-5% in the autumn from a potential peak of 16%+. Falling fuel prices are likely to pull headline CPI lower.
Here are the key risk events on the calendar:
