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Stay up to date with the top 10 daily stories
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(Bloomberg) – Inflation in the UK likely hit a new four-decade high above 9% in May, underscoring the challenge for the Bank of England as it threatens to raise interest rates faster in response.
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A week after rising costs from U. S. customersWith the US pushing the Federal Reserve higher through 75 accelerated capital issuances amid spasms in global financial markets, the UK data will offer investors a chance to wonder if politicians’ reaction is adequate.
While economists’ average forecast for inflation on Wednesday forecasts 9. 1%, one estimate, from Natixis SA, suggests a 10% result. The BOE estimates that the peak later this year will be “slightly above” 11%.
That forecast accompanied last week’s resolution through officials led by Gov. Andrew Bailey to raise the rate for the fifth consecutive meeting, by a quarter-point, and signal that a bigger move could occur if it’s mandated for inflation.
The BOE also warned that the economy could suffer a contraction in the current quarter, an investigation that this week’s reports could validate. Economists’ forecasts show that retail sales likely fell 0. 7% in May, while surveys of purchasing managers reveal a further increase. slowdown in production and services.
Investors will also watch policymakers’ reaction to the data, with at least seven such appearances expected this week, two additional through lead economist Huw Pill. Deteriorating economic news will fuel political debate that Prime Minister Boris Johnson’s government is doing enough to ease the cost-of-living crisis.
While arguments over Brexit are to blame, Thursday, the sixth anniversary of Britain’s vote to leave the European Union, will feature two special elections in which citizens of the northern and southwestern districts can share their views at the polls.
What Bloomberg Economics says:
“Worryingly, UK customer confidence is now below the global currency crisis, Covid-19 lockdowns and recessions of the ’80s and ’90s. “
–For a full analysis, click here
Elsewhere, testimonies from the heads of the Fed and the European Central Bank, as well as most likely additional rate hikes from Norway to Mexico and a reading of inflation in Japan will occupy global money markets.
Click here to see what happened last week and below is our summary of what’s in the global economy.
U. S. Economy
In the United States, Fed Chairman Jerome Powell will go to Capitol Hill on Wednesday and Thursday to deliver the central bank’s financial policy brief to Congress. His testimony follows the Fed’s biggest benchmark rate hike since 1994, as officials seek to engage the worst inflation. in 4 decades.
A large number of officials, including Charles Evans, Patrick Harker, Thomas Barkin and James Bullard, are also scheduled to speak at events across the country. for the July assembly of the Federal Open Market Committee.
Meanwhile, the timing of economic data is light. A report on past home sales is expected to show a further deterioration in demand with sky-high loan rates. These figures will be followed at the end of the week through data on new home sales.
Preliminary June production readings are expected on Thursday, while final information on June sentiment from the University of Michigan will show the following day whether a recovery in inflation expectations from the previous month persisted. resolution to raise interest rates through 75 basis points.
For more information, read Bloomberg Economics’ full week for the U. S. USA
asia
Chinese banks will set their lending rate on Monday as tension mounts to provide reasonable credit to the faltering economy.
Reserve Bank of Australia Governor Philip Lowe will speak on Tuesday after a review of Australia’s experience in controlling the yield curve.
The central banks of the Philippines and Indonesia will meet on Thursday, with the global push to raise loan prices on the minds of policymakers.
The Bank of Japan, which stuck to its ultra-flexible policy parameters on Friday, will closely monitor domestic inflation figures at the end of the week, and it is known that it will probably not look like an acceleration as the effect of more government fuel subsidies emerges. at stake. .
To learn more, read Bloomberg Economics’ full week preview for Asia
Europe, Middle East, Africa
Days after the European Central Bank ordered officials to work more temporarily to prepare a new tool to combat the crisis, President Christine Lagarde is likely to face questions about progress since the emergency assembly in which this heightened urgency was agreed. Parliament on Monday.
Other high-profile appearances come with the ECB’s lead economist, Philip Lane, hours later in London, and the governors of the central banks of France and Germany at a Bundesbank convention on Thursday. The highlight of eurozone knowledge comes with the Ifo index of business confidence in Germany on Friday. .
Meanwhile, following a Fed-led global tightening cycle, other central banks may simply draw attention. On Wednesday, the Icelandic government is expected to raise rates again in a bid to stifle Europe’s fastest real estate rebound.
On the same day, the Czech central bank is expected to make one last big hike before it takes over again. Economists are divided on whether the accumulation will be a hundred basis points or a quarter point even greater than that.
Forecasters are also wondering if Norges Bank could ramp up its tightening after emerging in increments of 25 core problems so far. There is a hypothesis that Norwegians may opt for a half-point increase on Thursday to keep inflation at a 33-year high.
By contrast, recent comments by Turkish President Recep Tayyip Erdogan promising further rate cuts have fueled the hypothesis that the central bank could deliver on its promises at its assembly on Thursday.
The bank has kept rates solid at 14% for the past five months even though inflation accelerated to a 24-year high of 74% in May.
In Morocco, officials may raise loan prices on Tuesday for the first time since 2008 to combat accelerating inflation triggered by drought and the domino effect of Russia’s invasion of Ukraine.
Egypt also raised rates on Thursday after making its biggest buildup in years to fight inflation and inspire foreign investment in local debt.
South African data on Wednesday is expected to show that inflation has surpassed the central bank’s 6% diversity target ceiling for the first time in more than five years in May. It is expected to raise its key interest rate on July 21.
To stay more informed, read Bloomberg Economics’ full week for EMEA
Latin America
Argentina will be the last major Latin American economie to report output in the first quarter. Analysts expect the expansion to have slowed from 2021 and contract in the fourth quarter.
Brazil’s central bank will release the minutes of its June meeting, during which it prolonged a cycle of record tightening. The subsequent decision noted that a 12th direct rate hike was on track for its next assembly in early August and noted that “risks to their scenarios remain in both directions. “
The mid-month reading of Brazil’s core inflation index may show that the overall figure is falling, but without much rest in the base reading that is now operating at a double-digit pace.
In Chile, the central bank will announce the minute of its June assembly in which it raised the policy rate to a record 9%, extending its longest and longest cycle of tightening on record.
Data on mid-month customer value in Mexico released Thursday morning may cement bets that Banxico will increase 75 base issues to 7. 75% this afternoon. Headline inflation has been above the 3% target for the past two years, the base rate longer than that. while in the north, the Fed has a very, very aggressive stance.
To stay more informed, read Bloomberg Economics’ full week preview for Latin America
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