Get 40% Off
🚨 Volatile Markets? Find Hidden Gems for Serious OutperformanceFind Stocks Now

Macro week ahead: UK and US inflation, Bank of Japan hints in focus

Published 15/12/2023, 15:48
Updated 15/12/2023, 16:11
© Reuters.  Macro week ahead: UK and US inflation, Bank of Japan hints in focus

Proactive Investors - US and UK inflation figures will be the festive focus next week as financial markets keep rolling in the run-up to the Christmas holidays.

Eyes will turn to Japan, where there is inflation data and the Bank of Japan on Tuesday follows decisions from the counterparts in the US, Europe and UK in the past week.

While there are no policy changes expected, there may be come hints about an end to the current negative interest rate policy to come in the next meeting or two.

UK data

For the UK, inflation gauges are scheduled for Wednesday morning, following the Bank of England meeting this past week, where there was pushing back against any talk of interest rate cuts.

The BoE’s monetary policy committee cautioned that key indicators of UK inflation persistence remain elevated and that further tightening in policy could be required if evidence of more persistent inflationary pressures emerges, with the MPC continuing to judge that risks to inflation projections “skewed to the upside”.

For Wednesday's CPI print, the market expects the headline annual rate to ease to 4.4% for November from 4.6% for the month before, while month-on-month CPI picks up to 0.2% from flat in October.

Core CPI is seen softening to 5.5% from 5.7%, and to 0.2% on a month-on-month basis from 0.3%.

UK gross domestic product and UK retail sales releases are due on Friday, with the final GDP print for the third quarter confirming that the economy stagnated compared to the second quarter.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

BoE speakers in the week include Ben Broadbent on Monday and Sarah Breeden on Tuesday, both of which have been voting to keep rates flat in recent meetings.

While the market has got very excited by some inflation and wage data in recent months, recently seeing predictions of BoE rate cuts brought forward significantly, the commentary from the MPC in the meeting should put a dampener on this, reckon economists at Bank of America (NYSE:BAC).

"When markets price in earlier cuts as a result, financial conditions may ease too much, requiring more rate hikes or holding spot rates higher for even longer. We see the reference to next year’s minimum wage increase and downplaying news in wage growth and services inflation as the BoE attempted to reinforce is ‘table mountain’ preference: the bar for data to shift the position is very high," they said.

US data

Also on Friday is perhaps the key releases of the week for the US, being personal income and spending along with PCE inflation, which remains a crucial figure the Fed is keeping an eye on, with the potential for rate cuts as soon as March getting markets excited this week.

It follows the CPI inflation data in the past week and Fed meeting.

Deutsche Bank (ETR:DBKGn) forecasts there will month on month growth in income, consumption and core PCE staying at 0.2%.

There will also be the durable goods orders data that day, where estimates are for the core gauge to tick higher 0.1% on the month from -0.3% in October.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Read more on Proactive Investors UK

Disclaimer

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.