Week in review
- U.S. headline inflation at 0.2% m/m, in line with consensus
- European Central Bank cut deposit rate by 25bp to 3.5%
- China exports up 8.7% y/y, above consensus of 6.6%
Week ahead
- U.S. FOMC meeting
- U.K. BoE meeting
- Japan BoJ meeting
Thought of the week
Central bank decisions have returned to the spotlight. The European Central Bank (ECB) delivered a widely anticipated 25bps cut last Thursday, with the U.S. Federal Reserve (Fed), Bank of England, and Bank of Japan meetings scheduled for the coming week. The ECB's policy statement, press conference, and new staff forecasts offered few surprises. In the U.S., the August CPI report showed further progress towards the Fed’s 2% target, with headline inflation at its smallest y/y increase since 2021. Despite shelter costs being the main upside contributor, markets have focused on firmer core CPI data, with market-implied probabilities suggesting a higher chance of a 25bps cut next week. A recent news article indicating the Fed is still contemplating the size of the cut has further fuelled discussions. Changes in the Fed’s guidance on the depth of future cuts are equally important to monitor.
Components of U.S. core inflation
Year-on-year change
Market data