It’s going to be a busy week ahead, with plenty of important events to watch. Monday will bring inflation data from Canada and Tuesday will see the release of the U.K. claimant count change, average earnings index 3m/y, and unemployment rate.
On Wednesday, we will get the latest inflation data from the U.K., while the U.S. will publish retail sales m/m. The day’s highlight will be the FOMC meeting.
On Thursday, New Zealand will publish its GDP q/q, while the Eurozone will release its inflation data. In the U.K., the focus will be on the BoE monetary policy announcement the U.S. will get the unemployment claims, building permits, housing starts, and pending home sales m/m figures.
Finally, on Friday, Japan will release national core CPI y/y, followed by the BoJ monetary policy announcement.
In Canada, the consensus for CPI m/m is -0.1% vs. the prior 0.5%. Median CPI y/y is expected to remain unchanged at 2.0%, while trimmed CPI y/y is also likely to remain at 1.9%. Common CPI y/y is expected at 2.7%, unchanged from the prior reading, while core CPI m/m is forecast at 0.2% vs. the prior 0.2%.
Gasoline prices eased slightly from July but remain significantly higher than a year ago, while food inflation is expected to stay around 3.0%. The BoC will monitor this data to assess the risk of higher energy prices feeding into broader inflation, but for now, there is limited evidence of significant spillover.
The Bank will remain data-dependent as it assesses the outlook for interest rates. Analysts expect the BoC to keep rates unchanged for now, with gradual hikes expected next year as the economy improves. However, there is a risk of an earlier move if the labor market and broader activity continue to recover.
Rising oil prices are adding to inflation risks, but there’s insufficient evidence that the higher energy costs are significantly feeding into prices except for in a few sectors like air travel.
In the U.S., the consensus for core retail sales m/m is 0.5% vs. the prior -0.3%, while retail sales m/m are expected at 0.8% vs. -0.6% previously.
Consumer spending continues to show resilience, with July’s retail sales decline largely reflecting weaker gasoline sales and a temporary drop in online shopping. Excluding gasoline, sales remained up 4.4% year-to-date through July.
Wells Fargo analysts expect retail sales to rebound by 0.7% in August, with higher fuel prices and inflation limiting the gain. That said, with the labor market still stable, consumer spending appears to be holding up.
At this week’s FOMC meeting, the consensus is for a 25 bps rate hike following the latest inflation data, which came in stronger than expected, particularly a core CPI at 0.29% which pushed the three-month annualized pace to 2.0%. Even though much of the upside was driven by wireless services, the result is still not something to ignore.
The core PCE also appears to be running above the Fed’s comfort zone, with the three-month annualized rate of 2.7–2.8% and the year-over-year measure likely to remain above 3%. The higher oil prices are only adding to the inflation backdrop.
The SEP is unlikely to see major changes to the growth, unemployment, or inflation forecasts. However, the 2026 median dot plot could rise to around 4.125%, signaling another hike after September. The Fed would still likely expect some easing from 2027 onward as inflation gradually cools.
The bigger uncertainty is what happens after next week. Additional hikes look like the current starting point, but a one-and-done outcome remains possible if inflation improves. Ultimately, the next few inflation reports will determine whether the Fed keeps tightening or stops after the September move.
At this week’s meeting, the BoE is expected to keep rates unchanged at 3.75%. Inflation remains a cause for concern, even though there has been some easing in services prices.
The July CPI stood at 2.9%, while core inflation was 2.6% and services inflation was 3.4%. The August figures are expected to show a pickup, with headline CPI forecasted at 3.2% and core inflation at 2.7%.
Wage growth will also be important, particularly if it starts accelerating again. At the same time, higher bond yields and mortgage rates suggest financial conditions are already tightening, supporting the view that policy remains restrictive even without a rate hike.
With July GDP and PMI data pointing to a solid start to Q3, the expectation remains for the BoE to raise rates in Q4. The Bank could strike a slightly more hawkish tone this week, while persistent energy and food price pressures could increase the risk of further tightening.
However, ING analysts expect the BoE to remain less hawkish than markets currently anticipate, arguing that while higher energy prices could push the U.K. inflation toward 4% this winter, there is limited evidence that the shock is spreading into broader inflation pressures. The analysts note that energy-intensive inflation has been falling, food inflation has eased sharply, and wage growth remains around levels consistent with the BoE’s inflation target.
ING also points to a fragile labor market, weakness in rate-sensitive sectors, and ongoing fiscal tightening, suggesting that current interest rates are already restrictive. Against that backdrop, it expects the BoE to keep rates unchanged this year, with the key risk to that view being if energy prices ease and become less volatile.
At this week’s meeting the BoJ is widely expected to raise its policy rate by 25 bps to 1.25%. Higher energy prices and pressure around yen intervention is adding urgency to normalization, but analysts warn the market may be pricing a hiking cycle that’s too fast.
Inflation data in Japan picked up again with headline and core CPI expected to print around 2.0% in August, but domestic demand has remained weak. Q2 growth was supported mainly by external demand and AI-related exports and investment, while private consumption was flat. Wage data also showed mixed signals, with headline growth stronger but same-sample growth slowing.
Analysts from Wells Fargo expect rates to reach 1.75% by April with weak domestic demand arguing for a gradual approach. However, persistent inflation or renewed yen weakness could speed up that process.
ING analysts warn about the potential risk of a 50 bps rate hike, even though 25 bps remains their base case for this meeting with two further 25 bps hikes in January and April. A larger one-time hike or back-to-back hikes in September and October could be part of a broader effort to push USD/JPY lower and reduce the need for further FX intervention.
This article was written by Gina Constantin at investinglive.com.