Tue, Sep 27, 2022 @ 04:25 GMT
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Week Ahead – Inflation Woes Continue

How will central banks respond?

Inflation and interest rates have been at the forefront of investors’ minds so far this year and that’s unlikely to change for some time yet. Earnings season provided a welcome and timely distraction and enabled markets to find some stability but as we saw towards the end of last week, inflation continues to dominate.

While many expect inflation to peak over the next couple of months, for various reasons, and then fall quite quickly, there’s not an enormous amount of confidence that everything will go according to plan. And there’s plenty of evidence over the last few months of inflation catching central banks and the rest of us by surprise.

Next week offers plenty of economic data from around the globe and unsurprisingly, it’s the inflation indicators that will attract the most attention. As will the commentary from the various policymakers that are scheduled to speak, with some slowly accepting that a big policy response is necessary and others continuing to push back against market expectations with little success. Whatever happens, it promises to be another fascinating week.


With Wall Street completely fixated on inflation, the upcoming round of economic data should confirm that peak of inflation is nearing and that the US consumer is still strong.  Tuesday’s release of producer price data should show that suppliers are still charging businesses higher prices while the Empire manufacturing survey is expected to return back to positive territory. On Wednesday, retail sales should bounce back as December’s slump was driven by the omicron hit to demand and supply disruptions. Also in the middle of the week, Industrial production is expected to rebound. Thursday is a busy day that includes initial jobless claims, Philly Fed business outlook, housing starts, and building permits.

Fed speak will include speeches from James Bullard and Loretta Mester on Thursday.  Fed’s Evans and Waller will participate in a panel that discusses the Fed’s new policy strategy.


A relatively quiet week on the economic side of things, with the bulk of next week’s notable data coming on Tuesday. GDP and employment data for the euro area will be notable but no game-changer, the same can be said for the ZEW surveys although they will contain some hint over how the economy is expected to perform amid higher levels of inflation. Once again, it’s the ECB speak that will be the highlight but we can probably expect more pushback against market expectations ahead of next month’s meeting when we will likely see a significant policy shift.

Olaf Scholz is scheduled to travel to Russia to meet Vladimir Putin on Tuesday in an attempt to ease tensions between NATO and Russia over Ukraine. 


Next week is when we get the UK data dump and, unsurprisingly, all of the focus will be on the CPI data and just how bad the situation has got. We don’t seem to get too many positive surprises at the moment and markets are already pricing in another four or five hikes this year, including another two consecutive increases in March and May. The BoE appears on board with the latter but has indicated market expectations over the year are excessive. Perhaps next week will change their mind.

Boris Johnson continues to hang in there as we await the outcome of the police inquiry into numerous lockdown parties.


The CBR raised interest rates by 100 basis points on Friday to 9.5%, in line with expectations. It did leave the door open to more increases though, despite the belief that inflation will return to target and peak soon.

Next week’s highlight will be the meeting between Putin and Scholz, with PPI data being of some interest.

South Africa

CPI data will be key next week as it currently sits right at the upper end of its target range and the SARB has raised rates at the last two meetings while signalling more could follow.


The first test of the year for the CBRT is next week as it meets to decide whether to keep cutting interest rates or not. Inflation has hit 48.7% if the official data is to be believed after the head of the agency was sacked. We could see a more restrained central bank over the next year as Erdogan will not want to go into an election next year with sky-high inflation, which may explain the relentless cutting exercise last year. Whether or not that gamble pays off is another thing but we should learn more next week.


China releases CPI for January on Wednesday. Inflation is expected to slow to 1.0%, down from 1.5% in December. A decline in food prices likely offsets the rise in energy and gasoline prices.


On Monday, India releases CPI for January. Inflation came in at 5.6% in December and is expected to rise to 6%, which is the upper end of the central bank’s target of 2%-6%. The expected upswing in inflation is a result of higher food and telecom prices as well as supply chain issues.

India, the world’s largest democracy, will hold elections in five states, including Goa and Uttarakhand. Some 180 million people are eligible to vote, and the results could determine the political future of Prime Minister Narendra Modi and his Bharatiya Janata Party (BJP).


Australia releases the January employment report on Thursday. Job growth sparkled in December (64,800), but is expected to have ground to halt in January, with a consensus of a negligible 2,500 new jobs. This is a result of the Omicron outbreak in January, which significantly dampened job growth.

The unemployment rate is projected to have inched lower to 4.1%, down from 4.2% in December.

New Zealand

Mostly tier two and three data being released over the course of the next week.


Japan releases fourth-quarter GDP on Monday. The economy is expected to have rebounded in Q4 as the government lifted health restrictions due to the Omicron wave at the end of September. The consensus for GDP Q4 stands at 6.0% y/y, after a contraction of 3.6% in Q3.

On Friday, Japan releases National CPI for January. Core CPI is expected to have posted a small gain of 0.3%, down from 0.5% in December. The drop in inflation can be attributed to the renewal of health restrictions across most of Japan, which put a dent in consumer spending.

Economic Calendar

Saturday, Feb. 12

  • US Secretary of State Blinken speaks to Japanese and South Korean officials about North Korea’s nuclear and missile programs
  • ASSIOM FOREX annual congress of financial market operators continues, with a speech by Bank of Italy Governor Visco

Sunday, Feb. 13

  • Informal meeting of EU trade ministers in Marseille, France

Monday, Feb. 14

Economic Data/Events

  • Australia RBA Minutes
  • ECB President Lagarde participates in European Parliament debate on ECB’s 2020 Annual Report
  • Assembly elections for India’s Uttarakhand, Goa to take place
  • Germany’s Scholz travels to Ukraine for talks with President Zelensky
  • Informal meeting of EU ministers in Bordeaux, France
  • Czech CPI
  • India CPI
  • India wholesale prices
  • New Zealand food prices

Tuesday, Feb. 15

Economic Data/Events

  • US cross-border investment, PPI, empire manufacturing
  • Germany’s Scholz travels to Moscow for talks with President Putin.
  • Germany ZEW survey expectations
  • Eurozone GDP
  • Japan GDP
  • Hungary GDP
  • Poland GDP, CPI
  • India Trade
  • Norway Trade
  • Canada housing starts, existing home sales
  • Japan industrial production
  • Mexico international reserves
  • New Zealand home sales
  • Philippines overseas remittances
  • UK jobless claims, unemployment
  • Turkey central government budget balance
  • Denmark PPI, GDP indicator
  • Norway consumer confidence

Wednesday, Feb. 16

  • NATO defense ministers meet in Brussels. Through Feb. 17
  • North Korea celebrates its Day of the Shining Star holiday to mark what would have been the 80th birthday of former leader Kim Jong Il, with satellite imagery pointing to a possible military parade to mark the occasion.

Economic Data/Events

  • Fed Minutes
  • US Retail Sales, business inventories, industrial production
  • Canada CPI
  • South Africa CPI
  • Russia CPI
  • Norway GDP
  • South Africa Retail Sales
  • China CPI, PPI
  • Eurozone industrial production
  • Japan tertiary index
  • UK House prices, PPI, CPI
  • EIA Crude Oil Inventory Report

Thursday, Feb. 17

  • G20 finance ministers and central bank governors meet
  • Fed’s Mester speaks at an event at the NYU Stern School of Business
  • Fed’s Bullard speaks at SGH Macro Advisors and Columbia University fireside chat
  • EU-African Union Summit in Brussels
  • ECB publishes its economic bulletin
  • ECB Chief Economist Philip Lane joins an MNI webcast
  • Norway’s Norges Bank governor’s annual address

Economic Data/Events

  • US housing starts, initial jobless claims
  • G20 finance ministers and central bank governors meet
  • Fed’s Mester speaks at an event of the NYU Stern School of Business
  • Fed’s Bullard speaks at SGH Macro Advisors and Columbia University fireside chat
  • EU-African Union Summit in Brussels
  • ECB publishes its economic bulletin
  • ECB Chief Economist Lane joins an MNI webcast
  • Norway’s Norges Bank governor’s annual address
  • Italy Trade
  • Japan Trade
  • Singapore Trade
  • Turkey Rate decision
  • Australia unemployment
  • Eurozone new car registrations
  • Singapore GDP
  • Russia gold and forex reserves

Friday, Feb. 18

Economic Data/Events

  • ECB’s Panetta and the Fed’s Evans; Waller and Brainard to speak at the US Monetary Policy Forum.
  • US existing home sales, US Conference Board leading index
  • UK retail sales
  • Japan CPI
  • France CPI
  • Sweden CPI
  • Russia GDP, money supply
  • Canada retail sales
  • Eurozone consumer confidence
  • Turkey consumer confidence
  • France unemployment
  • Turkey home sales

Sovereign Rating Updates

  • Denmark (Fitch)
  • France (Fitch)
  • Poland (Fitch)
  • France (S&P)
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