(Bloomberg) — Federal Reserve Chair Jerome Powell is anticipated to double down on his message that there’s no rush to cut rates of interest, especially after fresh inflation data showed that price pressures persist.
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Powell is headed to Capitol Hill, where he’ll deliver his semiannual monetary policy testimony to a House committee on Wednesday and a Senate panel on Thursday. The US central bank chief and nearly all of his colleagues have said in recent weeks that they may afford to be patient in deciding when to cut rates given underlying strength inside the US economy.
The “danger of moving too soon is that the job’s not quite done, and that the really good readings we’ve had for the last six months come what may find yourself to not be an actual indicator of where inflation’s heading,” Powell said in an interview with CBS’s 60 Minutes on Feb. 5.
That cautious approach has been validated in recent weeks by data showing inflation picked up last month. Nevertheless it’s no more prone to satisfy Democrats, who’re anxious about how the trail of rates could affect the November presidential election and down-ballot races. They’re expected to press the Fed chief on why officials are keeping borrowing costs so high, risking damage to the economy, after they’ve made so much progress on inflation.
The knowledge highlight for the week will likely be the monthly jobs report on Friday. Economists project payrolls growth moderated in February to 200,000 following a 353,000 surge a month earlier that was a very powerful in a yr. The jobless rate is seen holding at 3.7%, while hourly earnings growth probably cooled.
On Wednesday, the Fed will issue its Beige Book survey of regional business contacts from across the country. Other data within the approaching week include separate February surveys of shopping for managers at service providers, along with figures on the January trade balance and job openings.
What Bloomberg Economics Says…
Powell is anticipated to maintain up a hawkish stance in his semiannual testimony to Congress, signaling to markets that the Fed is in no hurry to cut rates. If that leads to tighter financial conditions, it’ll keep the pressure on the economy and lift the potential for additional lagged impacts from monetary policy.”
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Elsewhere, other political set-piece events from China’s National People’s Congress to the UK budget will draw attention, as will rate decisions inside the euro zone and Canada that are expected to indicate no change.
Click here for what happened last week, and below is our wrap of what’s coming up within the worldwide economy.
Asia
The National People’s Congress in China will likely be on the main focus in Asia as investors, economists and policymakers look forward to signs that Beijing is able to take more significant stimulus measures.
China’s growth goal for the yr can even offer clues on how aggressively the country’s leadership will pursue a recovery. Essentially the most recent price data and cumulative trade figures for January and February will indicate how severe China’s slide into deflation is becoming, along with the shortage of major support for the economy via exports.
February inflation figures for Tokyo usually tend to show a strong uptick since the impact of subsidies a yr ago fades, an final result which may fuel bets on a March rate hike from the Bank of Japan at a time when the labor market has tightened.
Board member Junko Nakagawa will provide probably the most recent signaling from the central bank on Thursday.
Economists in Australia will fine-tune their growth forecasts on Tuesday after current account data comes out. Gross domestic product is due the subsequent day, with tepid growth expected to proceed.
Growth figures for South Korea usually tend to stay largely unchanged after a revision, but consumer prices are expected to heat up again in data due on Wednesday.
Malaysia is anticipated to take care of rates unchanged at 3% on Thursday.
Europe, Middle East, Africa
Throughout the UK, Chancellor of the Exchequer Jeremy Hunt will unveil his budget on Wednesday in what is likely to be the final word such announcement before a general election that’s likely this yr.
Speculation in recent days has centered on possible giveaways for voters, and an end to the “non dom” status utilized by wealthy foreigners. Hunt could have limited room for maneuver on tax cuts.
Throughout the euro zone, the European Central Bank decision on Thursday will likely be the predominant event. Policymakers will unveil their first quarterly forecasts of the yr, which may show that they’re moving closer toward delivering a rate cut in coming months.
Faster-than-expected inflation in numbers released on Friday could still give officials reason for caution, and in order that they’re also awaiting data on wage deals to ensure that the whole pace of consumer-price gains isn’t getting reflected in pay.
Data inside the euro region will give a reading on the strength of manufacturing in key economies. Industrial numbers from Germany, France and Spain are all due.
Switzerland, whose central-bank chief just announced his departure for later this yr, will release inflation on Monday that’s expected by economists to have slowed to 1.2%, the weakest since 2021.
Turning east, Polish monetary officials are anticipated to take care of their rate unchanged at 5.75% on Wednesday, while their Serbian peers the next day will reveal within the event that they’re opting to hold borrowing costs at 6.5% again.
In Turkey, analysts predict data on Monday will show inflation accelerated to 66% in February, an final result that’s roughly in keeping with forecasts from the central bank.
And the next day in South Africa, a report is more prone to show that the nation skirted a recession, helped by an expansion in its mining and manufacturing industries. The economy is forecast to have grown 0.3% inside the fourth quarter of 2023.
Latin America
Brazil’s January industrial production data may show 2024 getting off to a strong start.
In Luiz Inacio Lula da Silva’s first yr back in office, output averaged 0.1%, far below the three.4% average seen during his first stint as president. Output averaged -1.2% over the next 12 years.
Brazil will even serve up the central bank’s weekly survey of economists, current account, foreign direct investment, monthly trade figures, bank lending and government debt data.
In Peru, most analysts have been looking fo the central bank to deliver a seventh straight quarter-point interest-rate cut to 6% at its meeting on Thursday. February inflation data posted Friday showing an unexpected jump in consumer prices likely complicates the selection.
On the ever-critical inflation front, the early consensus expects that consumer price data will show inflation slowed in Colombia and Mexico while rising barely in Chile.
Mexico’s double-barreled posting Thursday of mid-month and February consumer price readings will likely show enough cooling to green light Banxico to deliver a much awaited rate cut at its March meeting.
In Colombia, each the headline and core readings will slow to take care of BanRep easing on March 22, while Chile’s central bank — which sees inflation hitting the goal in the first half — won’t be postpone by the slight uptick reported here.
–With assistance from Paul Jackson, Vince Golle, Laura Dhillon Kane, Piotr Skolimowski, Paul Wallace, Monique Vanek and Robert Jameson.
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