The Bank of England (BoE) will watch a slew of data closely in the coming days after a knife-edge decision to keep interest rates steady on concerns that inflation is still uncomfortably high.
A packed week for observers of the UK economy runs through labour market numbers and consumer price statistics, and concludes with public finance and retail sales reports.
Wednesday’s inflation report will take the spotlight, not least because it’s the final reading for a deeply divided BoE before its next decision in March. Policymakers this month split 5-4 to hold, keeping their rate at a level that, along with the US Federal Reserve’s upper bound, is the highest among the Group of Seven.
Consumer-price growth is predicted by the BoE to recede to its 2% goal by April, yet for now is still well above that. Officials anticipate the January data to show inflation at 2.9%, while the median forecast of economists is 3%. Those at Pantheon Macroeconomics and Investec see higher-than-expected shop prices and hotel costs keeping the rate elevated.
Global purchasing manager indexes, inflation data from Japan to Canada, and Anna Breman’s first decision as New Zealand’s central bank governor will draw attention.
In the US, the government will issue its first estimate of gross domestic product for the fourth quarter, a period that included the longest-ever federal government shutdown. The latest report card on the economy, due on Friday, is projected to show growth cooled to a still-solid 3% annualised pace after expanding in the prior quarter at the quickest rate in two years.
Consumers probably remained the economy’s primary driver despite grumbling about the cost of living and anxiety over job prospects. Economists surveyed by Bloomberg anticipate personal spending rose at a 2.6% pace during the period.
Business spending on equipment also likely contributed to economic activity in the fourth quarter, though not to the extent it did in the previous three-month period, according to the Atlanta Fed’s GDPNow forecast.
The Bureau of Economic Analysis on Friday will also release figures on December personal spending and incomes, as well as the Fed’s preferred inflation gauge. Economists will play close attention to real disposable income, which has been weak recently, for clues on the potential trajectory of consumer spending.
On Wednesday, economists will parse December durable goods data for hints of momentum in capital spending. In addition, the Fed’s industrial production report may show a solid advance in factory output at the start of the year that would add to evidence of a nascent recovery in manufacturing.
In Canada, the headline inflation rate, currently 2.4%, may have edged higher in January due to a base-year distortion from last year’s sales tax holiday. Otherwise, price pressures remain muted, and the Bank of Canada expects inflation to hover near its 2% target through 2026.
The December merchandise trade release will give the first full-year view of how Trump’s trade war has battered and reshaped Canadian exports. January existing home-sales data are expected to show prices continuing to drift lower as US tariffs stoke economic uncertainty.
On Wednesday, the Reserve Bank of New Zealand, under new Governor Breman, is expected to leave borrowing costs unchanged. It’ll be her inaugural policy meeting there, having started a five-year term in December.
Staying with central banks, the Philippines and Indonesia announce rate decisions on Thursday.
Japan is back in the spotlight later in the week, with trade data, producer prices and wage figures providing further clues on the balance between external demand and domestic cost pressures. National CPI numbers for January on Friday are expected to slow while staying near the central bank’s target.
India rounds out the week with PMI data, offering a timely read on whether growth in services and manufacturing is holding up.
Eurozone finance ministers will discuss how to promote the use of the single currency in issuance and transactions, advancing their priority of strengthening its global role.
