Bloomberg -- As Donald Trump readies himself for a potential White House return and the turmoil on global trade that goes along with it, central banks across four continents are geared to make their last adjustment of interest rates for this week.
At the first scheduled meetings in 2025, Australian,
Canadian, Brazilian, and Eurozone representatives will have gone through the
new US president, who may be keen on raising tariffs.
This should reinforce a cycle of high dissonance in monetary policy as various economies will face varying issues related to inflation.
The
Australian authorities are likely to maintain interest rates unchanged on
Tuesday, while their counterparts in Canada might cut by up to 50 basis points
on Wednesday, expressing concerns that some disruptions that could sprout up
rapidly from its neighbor might begin to worry them.
The
Brazilian currency has plummeted in the past week following the threats issued
by Trump on tariffs towards the BRICS bloc. To contain the rising fears over
inflation, officials will possibly adopt higher borrowing costs.
Euro-zone
officials will be tweaking interest rates on Thursday, and their attention will
shift quickly from still-worried consumer price issues to the implications for
international trade. ECB President Christine Lagarde and her colleagues are
likely to cut rates by a quarter point, and that's also what Swiss officials
will do, whose currency often becomes a speculators' target in times of
geopolitical stress.
These are
important decisions in a phase of intense monetary policy activity as we head
into the Federal Reserve's decision on December 18, which economists expect
could result in another quarter-point cut in the US.
According
To Bloomberg Economics:
“European Central Bank Interest Rates to Decline 25 Basis Points by Next Policy Meeting on December 12; Governing Council Ahead of Subsequent Evolution of Trends in 2025.”
In other
news, among key highlights will be the US inflation figures and growth
statistics from the UK. For a recap of what happened last week, go here, and
below is an overview of what to expect globally.
United States And Canada
Several inflation reports that will come out in the coming days, including consumer price index data due Wednesday, will provide Federal Reserve policymakers with a final assessment of the pricing situation before their meeting next week. Any sign that the pace of progress in combating inflation has slowed may jeopardize the prospects for a third straight rate cut.
The jobs report that had been expected for Friday was contrary to trend, and traders went on to increase their bets that Federal Reserve officials will lower interest rates by another 25 basis points after the US unemployment rate unexpectedly increased.
The median forecast in a Bloomberg survey of economists expects the core Consumer Price Index, which excludes food and energy to better see through underlying inflation trends, to have risen for a fourth straight month by 0.3% in November. For the third consecutive month, the year-over-year rate is expected to be up 3.3%.
The index indicating prices paid to producers minus food and fuel is likely up 3.2% in November from a year ago, the biggest increase since June. This would suggest that the rate of wholesale inflation is increasing gradually.
Reducing interest rates by the central bank, which has been doing this since June, appears to have restarted the housing market and consumer spending. Furthermore, Prime Minister Justin Trudeau's proposal to temporarily rid sales taxes from items would greatly energize holiday shopping.
However,
the specter of 25% tariffs by Trump overshadows the Canadian economy. Such a
scenario would throw many questions to Governor Tiff Macklem about how that
uncertainty might influence the central bank's view on what's to come for the
next year.
Africa, Europe And Middle-East
On
Thursday, the European Central Bank will deliver several monetary policy
decisions.
·
ECB
will cut borrowing costs by a quarter point and share new economic projections.
Lagarde will be monitored for any clues on future policy directions as the
market sees a series of quarter-point cuts until the deposit rate at 3.25% is
lowered to 2%.
·
The
Swiss National Bank is expected to cut its rates by a quarter point in the
first meeting of President Martin Schlegel.
·
Serbian
officials will meet in Belgrade today and decide whether to leave borrowing
costs at current levels or try to catch up with moves by the European Central
Bank last week.
·
The
Ukrainian central bank is also expected to discuss its own borrowing costs but
further cuts aren't expected through the rest of the year.
Industrial
production in the euro area is expected to be published on Friday.
Outside the
currency bloc, Tuesday brings the inflation reports from Norway and Denmark.
Sweden will also release its monthly GDP on the same day.
The UK is
expected to release its growth figures on Friday and that may indicate the
return to modest growth at the beginning of the final quarter. The Bank of
England is also expected to announce inflation expectations.
In South Africa, from Monday to Thursday, the nation will be holding its first meetings as a rotating chair of the G-20, succeeding Brazil. This is against a backdrop of great global polarization and a Trump administration likely to disrupt international trade. Sherpas, deputy finance ministers, and deputy central bank governors will attend as the first set of delegations to start preparations for the presidents' meeting slated for November.
On Tuesday, inflation figures in Egypt are to come out. That's going to be at 26.5% on year-over-year terms in October, but the market does believe that this will still be too slow to justify a series of cuts in rates by the central bank before around March.
On
Wednesday, South Africa's inflation rate is expected to increase for the first
time in nine months to 3.1 percent in November from 2.8 percent in October as a
result of a falling rand and petrol prices rising.
In Russia,
monetary officials will be scrutinizing the data for November for more signs of
declining inflation after it eased to 8.5 percent in the preceding month. This
comes as the central bank continues to face heightened pressure to raise its
key interest rate again this month in a desperate measure to achieve an
inflation target of 4% for the coming year.
ASIA
Monday's data may indicate a marginal improvement in China's price trends for November, while consumer inflation is likely to climb to 0.5%. Factory-gate prices will also decline, but at a softer pace, which will show that the stimulus measures are not yet broadly affecting the economy.
On Tuesday, China is anticipated to report trade data that points to a deceleration in export growth from the previous month. The direction of the country's policy for the year will be decided through the Central Economic Work Conference planned for Wednesday and Thursday.
Japan will
publish revised GDP figures for the third quarter, which should gain only a
minor boost from capital spending data. On Friday, the Bank of Japan's Tankan
survey will give more insight into business optimism after profit slumped the
most in over two years.
Australia
is due to publish on Tuesday its NAB Business Confidence index, followed on
Thursday by labor statistics. Central banking news today expects the Reserve
Bank of Australia to keep interest rates the same on Tuesday with some banks
such as ANZ changing their expected timing to ease. RBA deputy chair Andrew
Hauser speaks the next day.
India's
consumer inflation figures are also due on Thursday.
Other trade
figures due from around Asia during the week include those from China, India,
Taiwan, and the Philippines.
Further, Uzbekistan's central bank will decide on Thursday on whether it will continue holding its benchmark rate at 13.50% for the fourth consecutive month.
Latin America
In Brazil,
a combination of rising consumer prices and interest rates that exceed target
levels would likely weigh on GDP-proxy and retail sales reports.
Meanwhile,
last month's inflation is estimated to have migrated above the 4.5 percent
upper limit of the range, and it could get the central bank to start at least a
75-basis-point rate hike while closing out 2024.
The week
ahead features central bank surveys from Brazil, Colombia, and Chile with Chile
reporting views from both analysts and traders.
The
industrial production figures in the next few days for October and the consumer
price index in November are expected to produce additional signs of how slowing
is affecting the Mexican economy, which is the second largest in Latin America.
Analysts do look forward to a decrease both headline and core inflation;
perhaps it will allow Banxico to continue with another round of successive rate
cuts as is set for its December meeting.
Peru's
central bank, taking into consideration the upside surprise in November
consumer inflation, is probably to be maintaining its key interest rate in 5%.
Argentina
apparently has emerged from recession and removal of capital controls at 2025
does seem secure.
That said,
the monthly disinflation rate may have reached a near-term bottom with the 2.7%
reading for October, while the year-on-year figure in November has now
decreased for the seventh consecutive month.