July 22, 2024

Has inflation headed “sustainably” or cooled again?

Has inflation headed "sustainably" or cooled again?

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Investors are trying to anticipate whether inflation has headed “sustainably” while it helps influence the size of the Federal Reserve’s next rate hike.

Any sign that price pressures are continuing to ease could reinforce the view that the Fed is nearing the end of its most aggressive tightening cycle in decades. 

Experts are divided over whether the US can escape a technical recession – two consecutive quarters of contraction – after the Fed’s rate hike cycle.

Moreover, on the corporate front, companies will start reporting fourth-quarter earnings in the coming week. Corporate earnings will give an important insight into the economy’s health amid concerns over a potential slowdown. 

U.K. GDP, Japanese inflation, and Eurozone data will also be in focus. 

The UK economy is set to enter a recession in all but name after official figures out later this week will likely reveal output slumped again in November.

The coming week would also see a barrage of first-tier economic indicators published in the People’s Republic of China.

Financial markets are also keeping tabs on the news flow regarding the opening of China’s economy.

The pandemic situation in the world’s second-largest economy remains in focus.

Has inflation headed “sustainably” or cooled again? – What else

US inflation figures and the start of corporate earnings season will be the main highlights of an otherwise quiet week.

The U.S. consumer price index for December is due on Thursday. Economists expect core inflation to have increased by 5.7% from a year earlier.

The U.K. is to release November GDP figures on Friday against a historic cost-of-living squeeze amid double-digit inflation levels.

Also, on Friday, Germany will publish an estimate of annual GDP growth. The forecast will show the impact of the energy crisis triggered by Russia’s war in Ukraine on the Eurozone’s largest economy.

The broader Eurozone is to publish data on industrial production and trade on the same day.

For more market events, watch our Economic Calendar

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*PLEASE NOTE The information above is not investment advice.