The Week Ahead: US Interest Rates

The Fed is on tap for an interest-rate decision. Chances are that the US central bank will keep the cost of borrowing on hold. But it could outline its plans to gradually scale back monetary easing. Anything other than gradual could upset the market.

The Bank of Japan will also announce its latest interest rate decision, which is expected to be unchanged at minus 0.1%. Last month the central bank pushed back its expectation for achieving its 2% inflation target to 2019. With little sign of inflationary pressures, the bank can afford to sit on its hands for a while.

Staying with central bank issues, the European Central Bank left interest rates unchanged last week. But it will have one eye on inflation. Whilst headline inflation in the Eurozone is still relatively subdued, core inflation came in at 1.2% for August. The Eurozone will report its final take on core inflation for August next week.

China will report its latest house price data. The rate at which property prices have been rising has slowed appreciably since the end of last year. In November of last year the average price of new homes were growing at 12.6% annually. In July 2017, the rate of growth had moderated to 9.7%.

And finally, a number of retailers in the UK have reported disappointing sales figures. John Lewis, which is seen as a barometer of Britain’s high street, reported a halving of profits for the first six months. It added that the tough retail climate will continue throughout this year. The UK will report retail sales growth for August, which is expected to be below the long-term average.

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