Next Week Preview: Major Central Bank Decisions and Key Data to be Released

1. In the coming week, the interest rate decisions of the Federal Reserve, Bank of England, and Bank of Japan, combined with dense economic data and the ongoing escalation of the Middle East conflict, are expected to dominate market trends and have a decisive impact on policy expectations and financial markets.2. The Federal Reserve will announce its rate decision next Wednesday, and there is still disagreement in the market as to whether it will raise rates by 25 basis points to 3.75%-4.00%. Driven by inflation concerns stemming from elevated energy prices, Fed Chair Waller’s hawkish speech at Jackson Hole, and a strong August employment report, the probability of a rate hike has been priced at about 70% before the release of the CPI data. The August CPI data to be released this Friday will ultimately shape market expectations ahead of the meeting. The FOMC statement and Waller’s press conference will provide guidance for determining the policy path for the remainder of the year. Other key US data include the New York Fed and Philadelphia Fed manufacturing indexes, August retail sales, industrial production, and initial jobless claims.3. The Bank of Japan is expected to raise rates by 25 basis points to 1.25% next Friday, a move that is almost certain following recent statements and continued pressure from US Treasury Secretary Yellen. The market will focus on Governor Kazuo Ueda’s press conference to catch signals about the future pace and extent of tightening. Next week’s Japanese data include July machinery orders, August trade data, and nationwide CPI.4. The Bank of England is expected to keep rates unchanged at 3.75% next Thursday, as policymakers have indicated they are in no rush to tighten policy. The vote distribution and meeting minutes will affect market expectations for a rate hike before December. Key UK data include August inflation, retail sales, and July employment figures.5. In the eurozone, main data releases include July trade, industrial production, and final inflation for August. Germany will publish the ZEW Economic Sentiment Index and PPI.6. Canada’s August inflation report will be the focus of commodity currency markets early next week, while attention also turns to the Bank of Canada’s September policy meeting summary to be released next Wednesday. New Zealand will release second quarter GDP, August electronic card retail sales, and trade data. Reserve Bank of Australia Assistant Governor Hunter will participate in a fireside chat in Canberra on Monday, and Governor Bullock along with other officials will attend the Parliamentary Economics Committee hearing next Friday.