Market turmoil has eased, but will US CPI stir things up again? Crucial week for sterling as UK CPI, GDP and retail sales on the way. The RBNZ is edging closer to a rate cut, but will it be next week? Japanese GDP, Australian jobs and Chinese data eyed too. US economy worries take front and center The panic about the US economy being on the verge of a recession has mostly eased but markets remain jittery.
July CPI figures will follow on Wednesday and could be key to shaping rate cut expectations for the BoE’s September gathering as the odds for a second 25-bps reduction currently stand at around 30%. Headline inflation was unchanged at 2.0% in June – bang on the BoE’s target. But it probably edged up in July to 2.3% y/y, supporting the reasoning behind the hawkish cut at the August meeting. Investors will also be keeping a close eye on services CPI, which like wages, remains elevated.