Investors braced for a packed week of central bank meetings to see borrowing costs rising globally, with some risk of a super-sized hike in the US.
Three of the largest five economies will hold their central bank meetings this week, including the US, Japan and the UK.
Financial markets are on edge as the Federal Reserve’s two-day policy meeting begins today.
The big announcement is expected on Wednesday as the Fed will almost certainly raise rates by three-quarters of a point for the third consecutive time. It is another hefty interest rate hike to quell decades-high inflation.
This comes as inflation is undoubtedly a significant problem and amid worries that the stock market, which has already had a dismal 2022, could be in for more prolonged pain.
Just months ago, investors worried the Federal Reserve was not fighting inflation aggressively enough.
Several jumbo rate hikes later, some now fear the Fed will plunge the economy into recession by tightening monetary policy too quickly.
After falling 5% last week, the stock market faces another volatile week as the Federal Reserve meets Wednesday to raise interest rates.
Having been postponed due to the death of Her Majesty Queen Elizabeth II, the Bank of England meeting will take place. Markets will be eager to see the assessed impact of the energy price cap on the BoE’s inflation projections.
On the cryptocurrency front, another turbulent session for bitcoin at the start of the week in which it came close to its June low before recovering alongside other risk assets. It’s not a great environment for risk assets, and central banks could deliver another blow this week.
Markets, Economy on edge ahead of a packed week of central bank meetings
Central banks are lining up this week to deliver rate hikes as the desperate fight against inflation continues. The Fed headlines on Wednesday, but others will follow, including the BoE, SNB, SARB and the Norges Bank on Thursday.
The BoJ will also meet on Thursday to discuss generating sustainable inflation, not fighting it.
This week will bring essential readings on the state of the housing market, with housing starts reported for August on Tuesday and existing home sales for August on Wednesday.
The week will end with flash PMIs for the UK, US, Japan, Eurozone and Australia, indicating economic performance at the end of the third quarter.
Key diary events
Tuesday 20 September
Japan Inflation (Aug)
Australia RBA Meeting Minutes
Canada Inflation Rate (Aug)
Wednesday 21 September
Eurozone ECB Non-Monetary Policy Meeting
United States Fed FOMC Interest Rate Decision, MBA Mortgage Applications (16/Sep), Existing Home Sales (Aug)
Thursday 22 September
Japan BoJ Interest Rate Decision, Foreign Bond Investment (Sep)
United Kingdom BoE Interest Rate Decision
Eurozone ECB General Council Meeting
Norway Norges Bank Interest Rate Inflation Decision
United States Continuing Jobless Claims (10/Sep)
Eurozone Consumer Confidence Flash (Sep)
Friday 23 September
Japan Market Holiday
S&P Global Worldwide Flash PMIs*
United Kingdom Gfk Consumer Confidence (Sep)
Canada Retail Sales (Jul)
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