The world’s top central banks will probably wrap up 2022 with hefty rate hikes as their battle against inflation continues.
A highly-anticipated inflation reading and the Federal Reserve’s last policy decision of the year will serve as highlights during what should be the final week of major economic news in 2022.
The double dose of the Fed decision and CPI data will set the table for the remainder of this year and into 2023.
Investors expect a modest 50-basis point hike from the US Fed for December. After that, they will focus on indications of how high rates may ultimately rise as recession fears loom.
A recent uptick in US jobs data has revived inflation fears, especially with November wage growth. Also, data from last week showed that producer prices rose slightly more than expected in November.
In its bid to control surging prices, the Fed added 375 basis points to interest rates since March. Before that, interest rates peaked at just 25 basis points.
The Fed executed four back-to-back jumbo rate hikes of 75 basis points from June through November. Moreover, the US Central bank has indicated it could turn aggressive again with rates in 2023 if the battle against inflation needs to continue.
The closely-watched Consumer Price Index (CPI) for November may foretell how much higher rates could go in the coming year.
Economists project headline CPI rose 0.3% last month, a marginal deceleration from the 0.4% increase seen in October. On an annual basis, CPI likely rose 7.3% in November, down from the prior year-over-year reading of 7.7%.
The battle against inflation continues – What else?
Investors will have a very busy economic calendar this week with multiple data releases apart from the US CPI report, major central banks’ economic projections and interest rate decisions.
Economic events to follow:
Tuesday, 13th of December
The Federal Open Market Committee will begin a two-day meeting to discuss whether and how much to raise interest rates.
EUR – Inflation Rate Final (Germany- Nov)
GBP – Unemployment Rate (OCT)
EUR – ZEW Economic Sentiment Index (DEC)
USD – Inflation Rate (NOV)
Wednesday 14th of December
JPY – Industrial Production (Oct)
GBP – Inflation Rate (NOV)
EUR -Industrial Production (OCT)
USD – Fed Interest Rate Decision & Press Conference
NZD – GDP (Q3)
Thursday, 15th of December
The deteriorating economic outlook is unlikely to stop the Bank of England from hiking rates by 50 basis points to 3.5%.
Market watchers expect the ECB to deliver a 50-basis point rate hike after data last month showed that annual inflation slowed for the first time in one-and-a-half years.
The Commerce Department releases figures for retail sales, which includes spending at stores, online and at restaurants. The government’s retail sales report will add to a consequential week on Wall Street.
GBP – BoE Interest Rate Decision
EUR – ECB Interest Rate Decision & ECB Press Conference
USD- Retail Sales (NOV)
USD- Industrial Production YoY (NOV)
Friday, 16th of December
The data firm S&P Global releases December purchasing managers indexes for the manufacturing and services sectors in various countries.
GBP- Retail Sales (NOV)
EUR- Manufacturing & Services PMI flash (Dec)
GBP- Manufacturing & Services PMI flash (Dec)
EUR- Inflation Rate (NOV)
USD- Manufacturing & Services PMI flash (Dec)
For more market events, watch our Economic Calendar.
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