Markets turn their attention to Washington and Ottawa this week, where the US and Canadian central banks are likely to cut interest rates, while the rest of the G7 nations remain on tenterhooks.
Expected interest rate decisions
North America will likely be the focus of monetary policy decisions, with four major central banks expected to announce their decisions in less than 24 hours, starting Wednesday, when the US Federal Reserve and the Bank of Canada are expected to announce quarter-percentage-point rate cuts, a widely anticipated move.
The Bank of Japan is expected to keep its monetary policy unchanged next Thursday, despite gradually approaching its first potential interest rate hike in years. European Central Bank officials have confirmed that their meeting will not result in any further easing at this time. The Bank of England will keep interest rates unchanged next week pending the government's budget announcement.
Slowing growth and deteriorating labor market
The move in North America reflects growing concerns about slowing growth and deteriorating labor market conditions on both sides of the U.S.-Canada border, warranting immediate action, even as monetary policymakers remain concerned about inflationary pressures.
In the rest of the G7, caution remains the order of the day, as officials monitor the impact of US President Donald Trump's tariffs on global growth and assess the strength of domestic consumer prices.
With the exception of Japan's gradual move toward monetary tightening, the general trend within the group remains toward interest rate cuts, albeit without haste. The picture is expected to become clearer during the final round of meetings of the year in December.
Bloomberg Economics Expert Opinion:
Bloomberg Economics analysts said Federal Reserve Chairman Jerome Powell is likely to describe the cut as a precaution against downside risks to jobs. Although the US government shutdown has delayed the release of official data, alternative data points to continued risks to the labor market. There are few compelling reasons to revise the September forecast, leaving the possibility of another cut in December open.
Anna Wong, Stuart Paul, Eliza Winger, Estelle Ou, Chris Collins, and Troy Deary, economists.
Expected economic data
Key data releases for the week include inflation figures in Australia and the Eurozone, purchasing managers' indices in China, and interest rate decisions in Chile and Colombia.
Meanwhile, attention will be focused on US President Donald Trump's latest moves on trade. He is scheduled to meet with several Asian leaders this week during his three-nation tour of the region, while he will meet with Chinese President Xi Jinping on Thursday in a meeting expected to be widely watched.
His tour coincides with the Association of Southeast Asian Nations (ASEAN) summit in Malaysia and the Asia-Pacific Economic Cooperation (APEC) summit in South Korea. He will also travel to Tokyo.
