The Federal Reserve’s signal that interest rate hikes could come sooner than expected, is expected to dominate market sentiment in the coming week and likely the months ahead as market participants digest the hawkish shift in policy guidance. As a result, an appearance by Fed Chair Jerome Powell before Congress on Tuesday will be in focus, as will comments by several other Fed officials during the week.
Investors will be keeping a close eye on next week’s economic data for clues on whether the recent surge in inflation — which saw consumer prices accelerate at their fastest pace in 12 years last month — will persist.
Friday’s data on personal income and spending will be closely watched as it contains the core PCE price index, which is rumoured to be the Fed’s favourite measure of inflation. Stock markets traded lower last week, with value stocks in particular taking a hit and this pattern looks set to continue, in the short term at least. In the UK, the Bank of England meets on Thursday with markets on the lookout for new rate hike clues.
Most analysts are not expecting any policy changes after the BoE last month said it would slightly reduce the weekly pace of its bond purchases. The recent decision by British Prime Minister Boris Johnson to delay the full economic reopening by a month could be seen as reason for policymakers to stick to their cautious stance.
But some analysts have not ruled out a discussion around tapering, particularly with other global central banks, notably the Federal Reserve, starting discussions on exiting crisis era stimulus measures.
This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.
Strictly Necessary Cookies
Strictly Necessary Cookie should be enabled at all times so that we can save your preferences for cookie settings.
If you disable this cookie, we will not be able to save your preferences. This means that every time you visit this website you will need to enable or disable cookies again.
3rd Party Cookies
This website uses Google Analytics to collect anonymous information such as the number of visitors to the site, and the most popular pages.
Keeping this cookie enabled helps us to improve our website.
Please enable Strictly Necessary Cookies first so that we can save your preferences!
