The US economy is expected to show signs of moderation in inflation, which could reassure the Federal Reserve as it shifts its focus towards protecting the labor market. The consumer price index (CPI) is predicted to rise by 0.1% in September, the smallest increase in three months, and 2.3% compared to the same period last year, marking the sixth consecutive slowdown.
The core CPI, which excludes volatile food and energy categories, is expected to rise by 0.2% from the previous month and 3.2% from September 2023. This gradual slowdown in inflation suggests that policymakers may opt for a smaller interest-rate cut at their next meeting on November 6-7.
The Federal Reserve’s preferred inflation measure, the personal consumer expenditures price index, is set to be released later this month. According to economists, the CPI report is unlikely to sway the Fed’s confidence that inflation is on a durable downtrend.
In other economic news, the University of Michigan will release its preliminary October consumer sentiment index, and the Fed will release minutes of its September meeting. Several Fed officials, including Neel Kashkari, Alberto Musalem, and Lorie Logan, are scheduled to speak in the coming week.
In Canada, officials will release the final jobs report before the next Bank of Canada rate decision, which will be a crucial input for Governor Tiff Macklem. The central bank will also publish surveys of business and consumer expectations for economic growth and inflation.
Elsewhere, central banks from New Zealand to South Korea may cut rates, while France will reveal its budget and the European Central Bank will publish minutes of its September policy meeting. In Asia, the Reserve Bank of New Zealand is expected to trim rates by a half percentage point, while the Bank of Korea will probably cut its benchmark by a quarter point. The Reserve Bank of India is seen holding its repurchase rate and cash reserve ratio steady.
In Europe, Germany’s manufacturing woes will be in focus with the release of factory orders and industrial production data. France will present its 2025 budget bill, while the European Central Bank will publish an account of its previous meeting. In the UK, GDP data will point to the health of the economy in August.
In Latin America, third-quarter consumer price data for all five big inflation-targeting economies will be released. Lower readings are expected in Chile, Colombia, and Mexico, while Brazil’s economy and prices are likely to continue heating up.
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