A central bank bonanza and other world market themes for the week ahead

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What investors will be watching over the next seven days

A breathless line-up of central bank decisions from the United States to Japan, Britain to Switzerland and Brazil to South Africa will keep markets spellbound in the days to come.

Fed chair Jerome Powell’s take on the pace of monetary tightening, economic resilience and sustainability of inflation will be crucial - as will signs of how the balance sheet unwind is proceeding. Some worry the process, in which the Fed cuts its balance sheet by $95 billion per month, could hurt market liquidity and weigh on the economy.RICHARD A. BROOKS/AFP/Getty Images

The currency’s precipitous, almost weekly slide against the dollar even provoked the BOJ’s weak-yen-proponent governor, Haruhiko Kuroda, to warn of “unfavorable” rapid moves. The ability of the Bank of England and Britain’s new finance minister, Kwasi Kwarteng, to manage an economy in decline faces a major test.

The euro zone PMI is already below the 50-marker that separates contraction from expansion - a sign the bloc may enter a recession earlier than previously thought as the energy shock and tighter monetary policy bite. With Italy’s Sept. 25 election looming, the bloc’s economic outlook is much in focus.

 

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