Fed, ready, steady, cut: World market themes for the week ahead

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Fed,Brazil,Rate

What investors will be watching over the next seven days

Don’t go anywhere: an event-packed week is coming up with central banks from the United States to Brazil and from Europe to Japan meeting.

The recent debate has centred on whether the Fed would opt for a 25 basis point or 50 bps September cut. Odds have tipped in favour of a smaller move after data showed consumer prices rose slightly in August, but core inflation was a bit stickier. Since keeping rates at 10.50% in July, the bank has hinted it could raise borrowing costs to meet its 3% inflation target. The hawkish stance, reinforced by incoming governor Gabriel Galipolo, has fuelled bets on a forthcoming 25 bps hike that could bolster the real..In South Africa, where inflation is nearing its target, policymakers are expected to trim rates for the first time in four years on Thursday. Turkey is expected to hold rates at 50% the same day, but potentially cut in November.

Going against the tide of global easing, BOJ policymakers have expressed their resolve to raise rates further, so long as markets behave and economic conditions remain favourable. An unexpectedly dovish Fed could weaken the dollar, alter inflation projections for nations, such as Britain that import dollar-priced commodities and prompt Norges Bank to support the oil-linked crown.

The Italian bank unveiled a 9% stake in the German lender - half of it bought directly from the German state. UniCredit CEO Andrea Orcel is keen to buy more or even take Commerzbank over should it want a tie-up.

 

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