China released its October PMI reports on Sunday, with ongoing power shortages likely to continue to weigh on the industrial sector

The Federal Reserve and its global counterparts are close to being the focus of monetary policy action in three days that will show if they share the alarm about rising inflation that has gripped investors.

The Reserve Bank of Australia will be the first decision on Tuesday that, according to Bloomberg Economics’ James McIntyre, “becomes a potentially market-moving decision.” However, officials are faced with a surprisingly sharp rise in core consumer prices. Economists expect not to raise interest rates again for the time being.

Wednesday’s eagerly anticipated meeting of the Fed is likely to usher in a taper on bond purchases, the beginning of a wind-down on the pandemic bond buying reported by Chairman Jerome Powell. Economists and market participants will pay attention to when the mining starts and how long it lasts.

The central bank is currently buying about $ 120 billion in assets per month and is committed to maintaining that pace until “significant further progress” is made on both employment and inflation.

Fed officials broadly agree that the latter test passed – prices rose 4.4% year over year in September, on their preferred scale. They’re more divided on the job market, and maybe Friday’s US payroll report can give a clearer overview.

On Thursday, attention turned to the Bank of England, whose decision became a cliffhanger after recent statements by some officials suggested sudden concerns about price pressures. Investors are betting on an increase, while economists are predicting hardly any change.

“A heated debate is raging in the Monetary Policy Committee about whether or not to raise rates next week. Financial markets believe it is a done deal thanks to a series of Hawk interventions by Governor Andrew Bailey. We’re less sure. “

These meetings are only the most prominent in a week after Halloween, when global inflation fears will also bring other central banks into focus. The monetary authorities in Poland and the Czech Republic are expected to hike rates, while those in Norway are likely to signal a hike in their decision in December.

Aside from the Fed’s decision, investors will also be watching key data highlighting the state of the art in the economic recovery from the pandemic.

The October non-farm payroll report, due on Friday, is expected to show a rebound in new hires after two disappointing months of employment growth. While the leisure and hospitality sector could see growth in the face of declining Covid-19 cases, employment growth is still largely constrained by a limited supply of labor and high churn rates.

The number of employees rose last month by 450,000, more than twice as much as in September, according to the median forecast of a Bloomberg survey of economists. The unemployment rate is said to have fallen from 4.8% to 4.7%.

The recently appointed Prime Minister Fumio Kishida is expected to win the parliamentary elections in Japan this weekend. With the vote out of the way, investors and economists will be watching closely what specific measures the government is planning to take to support the economy.

Monday’s South Korean export figures will provide the latest snapshot of the strength of world trade, especially the tech sector, as supply bottlenecks continue to hamper supply flows.

The RBA will meet on Tuesday to decide policy after inflation returns to the central bank’s target range. This unexpected move has fueled speculation that Governor Philip Lowe’s schedule for possible rate hikes is far too long, despite sticking to his line for the time being. A more detailed policy statement later in the week could provide more clarity on the current mindset of the RBA.

China released its October PMI reports on Sunday, with ongoing power shortages likely to remain a drag on the industrial sector. Factory advertisements from across the region will follow on Monday.

While the main focus will be on the BOE and its colleagues across the region from Norway to Eastern Europe, the appearances of the President of the European Central Bank, Christine Lagarde and colleagues, may also attract the attention of investors.

The ECB failed to convince financial markets last week that it will not hike rates next year. Officials could use speaking appearances in the coming days to counter such expectations.

Among the eurozone reports due, German factory orders and industrial production will show how global supply shortages impacted the region’s largest economy in September.

Elsewhere, Turkey will release October inflation figures on Wednesday, a few days after raising its year-end forecast to 18.4%. At the urging of the President, the central bank has cut its key interest rate in successive cuts by 300 basis points, the price pressure is “temporary”.

Zambia’s Ministry of Finance announced the talks with the International Monetary Fund on Tuesday. Africa’s first delinquent government debtor of the pandemic era is seeking an economic program that will anchor debt rescheduling talks with creditors, including holders of its $ 3 billion foreign currency bond.

On Friday, data from Mauritius will likely show that inflation slowed for the third straight month in October, after peaking at 6.5% in July, giving the central bank leeway to set interest rates at its final meeting of the year to hold in December.

And in Russia, inflation due on Wednesday will show how far price growth continues to exceed the central bank’s target, which after the unexpectedly sharp rise on October 22nd may signal further rate hikes in the coming months.

A report from Monday could show that prices in Peru’s capital Lima fell for the first time since April in October.

On Tuesday, the Colombian central bank released the minutes of its October 29 meeting in which policy makers raised the key rate by half a percentage point to 2.5%.

Chile’s GDP proxy numbers, which have exceeded expectations since February, posted double-digit growth on Tuesday, likely a sixth month in September.

The Brazilian central bank on Wednesday released the minutes of last week’s meeting in which it carried out its largest rate hike in almost two decades to push the Selic down to 7.75%.

Inflation is more than 600 basis points above target and President Jair Bolsonaro has big spending plans ahead of next year’s elections. The central bank says investors should expect a second consecutive 150 basis point hike on December 8th.

The data released on Thursday could show that Brazil’s industrial production fell by a fourth month in September due to supply chain disruptions and rising electricity prices.

Colombia reports October inflation figures on Friday. Analysts see the end of 2021 at 4.9% and 3.5% next year.

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Ref: https://www.livemint.com