The consumer price index likely jumped 7.3% in January from a year ago, the biggest annual gain since the start of 1982, according to the median projection of a Bloomberg survey. economists. Excluding the volatile energy and food categories, the CPI is expected to have risen 5.9%.
The inflation data follows the government’s latest jobs report, which showed renewed momentum in the labor market and faster wage growth that have boosted bets that the Fed will be more aggressive in the increase in rates.
It’s been a light week for the Fed, with only the Cleveland Fed’s Loretta Mester and Governor Michelle Bowman scheduled, both on Wednesday. Mester is an FOMC voter this year and Bowman will be the first governor to make public remarks since Chairman Jerome Powell’s Jan. 26 press conference.
Washington’s relative silence likely reflects the fact that Powell and Gov. Lael Brainard are awaiting Senate confirmation — Powell for another four years at the helm and Brainard to become vice president.
The Senate Banking Committee plans to vote on them on Feb. 15, along with President Joe Biden’s three nominees to join the Fed Board of Governors: Lisa Cook, Sarah Bloom Raskin and Philip Jefferson. All five will then need to be confirmed by the full Senate.
What Bloomberg Economics says:
“With energy and food prices continuing to rise, Bloomberg Economics estimates that January inflation continued to exceed the average monthly run rate, in line with a 2% annual inflation target. “We expect inflation to peak in February. What’s a bit more reassuring is that high inflation hasn’t yet appeared to cause long-term inflation expectations to unanchor.”
–Anna Wong, Yelena Shulyateva, Andrew Husby and Eliza Winger. For a full analysis, click here
Elsewhere, Russia’s central bank could raise rates by 100 basis points, perhaps the biggest move in another week of global tightening anticipated by monetary officials from Poland to Peru.
Japan released household spending figures on Tuesday that could show the early impact of omicron fears on private consumption, one of the latest quarterly GDP data released the following week.
Wages are likely to show continued meager gains as Prime Minister Fumio Kishida attempts to raise wages across more of the world’s third-largest economy.
Australian business and consumer confidence reports will give a check on the mood Down Under as the RBA ends its bond-buying program on Thursday, following the decision to improve its inflation outlook and employment.
India and Thailand have central bank meetings on Wednesday, and Indonesia follows on Thursday.
As China returns from its week-long Lunar New Year holiday, investors will be scrutinizing spending figures to take the pulse of consumers in the world’s second-largest economy.
Europe, Middle East, Africa
Governor Andrew Bailey will speak on Thursday, following the Bank of England‘s first consecutive rate hikes since 2004. He could explain his vote to block an even bigger hike, and could perhaps clarify comments calling for wage moderation which prompted a reprimand from Prime Cabinet minister Boris Johnson.
Gross domestic product data on Friday will show how Britain’s economy has weathered the first full month of the omicron variant of the coronavirus, with new growth figures for December. Economists predict a third consecutive quarter of expansion through the end of 2021, with a median forecast of 1.1%.
In the euro zone, the most important data will be German industrial production for December, due Monday. While economists are anticipating a rebound from the previous month – as seen before with factory orders – that probably won’t be enough to prevent a contraction in the fourth quarter.
After a hawkish turn last week, markets will listen to comments from European Central Bank President Christine Lagarde on Monday when she addresses a committee of the European Parliament. ECB policymakers including Philip Lane, Luis de Guindos, Francois Villeroy de Galhau and Frank Elderson are also expected to speak next week.
Meanwhile, the region’s growth and inflation outlook will be a highlight of the European Commission’s forecast on Thursday.
Among central bank decisions, economists expect Poland and Iceland to hike rates by half a point, while Romanian officials could hike by 25 basis points.
No change was seen Thursday from Sweden’s Riksbank, with the focus instead on when officials plan to cut bond holdings and whether borrowing costs could rise next year. Serbia’s central bank is also expected to keep rates unchanged.
The biggest central bank move of the week in the region could be in Russia, where authorities are expected to hike rates another 100 basis points as inflation remains stubbornly high.
Further south, inflation data from Egypt on Thursday is expected to accelerate to around 6.5% in January, still within the authorities’ target range of 5% to 9%. Further ahead, its first rate hike in more than four years is expected to follow the tightening in the United States
- Data from Ghana on Wednesday is expected to show that inflation exceeded the central bank’s target range of 6% to 10% for a fifth consecutive month. Policymakers see it remaining above the ceiling for next year and say they are ready to take action if necessary.
Chilean inflation data released on Tuesday may show its dizzying 10-month rise took a break in January, but no one sees a peak any time soon.
Meanwhile, exhausted consumers, high inflation and high interest rates point to a decline in Brazilian retail sales in December.
Mexico’s central bank is expected to raise its key rate on Thursday for a sixth consecutive meeting, by half a point to 6%. A board member sees a debate about a half-point hike versus a quarter-point hike.
Minutes from Chile’s central bank meeting on Jan. 26 may indicate what will happen after the biggest rate hike in 20 years.
On Friday, Mexico’s industrial production numbers should be consistent with an economy in recession. Brazil’s monthly GDP data posted its first positive result in five months in November, but growing headwinds suggest a negative reading for December.
Peru’s central bank may consider a sharp drop in January inflation data to maintain the current rate of tightening and raise the key rate to 3.5%.
Reports on Wednesday could show that inflation in Latin America’s two largest economies is finally falling. Central bankers in Brazil and Mexico continue to tighten even as both economies are in recession.
This story was published from a news feed with no text edits. Only the title has been changed.
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