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WEEK AHEAD:SEPTEMBER 12

Short Description

BOE Decision & Putin-Xi Meeting

Video Script

Bank of England Interest rate decision

This week, the Bank of England's monetary policymakers will meet again. Forecasts indicate that to combat huge inflationary pressures in the British economy, the Bank of England will likely raise interest rates even further from their current 14-year high. To prevent inflation expectations from rising, Bank of England rate-setter Catherine Mann has stated that a ‘forceful’ tightening of monetary policy is required.

Number two:

Putin and Xi Jinping meeting

Chinese President Xi Jinping and Russian President Vladimir Putin will meet face to face for the first time since Russia's invasion of Ukraine. The visit serves as a reminder of the importance of China-Russia relations to Beijing, especially after Russian gas producer Gazprom announced that a deal has been reached allowing China to pay for Russian gas in local currencies. The summit, which will take place in Uzbekistan, should have an immediate impact on investors' perceptions of geopolitical risk.

Number three:

US Inflation numbers

Tuesday will see the release of the US Consumer Price Index report for the month of August. Analysts predict that regardless of the results of the upcoming CPI report, the Fed will likely raise interest rates by between 50 and 75 basis points at their next meeting. However, the data may influence the Fed's medium-term thinking as we look ahead to Fed meetings later this year and in early 2023. Lower inflation readings might trigger intraday short positions on the greenback.

Number four:

Euro-Zone Inflation 

With the continued upward pressure on energy costs, the Eurozone inflation rate is anticipated to increase to double-digit levels soon. The euro has been falling on the risk that consumers cut back on their spending and businesses struggle with rising energy prices, creating a significant chance of a recession. This week, the European Central Bank will disclose its August inflation readings. If there hasn't been any softening in prices, the ECB will likely continue to frontload a series of rate hikes and sacrifice regional growth.

Number five:

British CPI readings

Another piece of inflation data, this time from the United Kingdom, is due out this week; it will be revealed on Wednesday. The UK's inflation rate surged to 10.1% in July, marking the first time in more than 40 years that the rate has increased by double digits annually. The data is likely to highlight the challenging task the Bank of England has in trying to reduce inflation. Widespread price increases throughout the UK economy in July led to an inflation rate higher than in other G7 nations.


 

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