- UK data due in the coming days will be closely monitored by both investors and BoE policy makers as there is still a possibility that the MPC may cut rates at the November policy meeting. UK labour market data is up first, released tomorrow morning and markets are looking for private sector pay gains to fall slightly. Cooling pay gains may help to smooth the path to an interest rate cut from the BoE, but markets will likely pay more attention to Wednesday’s inflation report. Headline CPI is expected to have eased slightly in September to 1.8% from 2.2% in August, driven by softer services inflation. An inline print could green light a cut at the November meeting however markets currently remain split between a November or December cut.
- The final reading of euro area CPI inflation is released on Thursday morning, just a few hours before the ECB policy meeting. Price pressures in the region are easing with the headline rate falling below the central bank’s 2% target for the first time since 2021. It is almost certain that members of the Governing Council will announce another 25bp cut at Thursday’s meeting with many expecting a further cut of the same size in December. Recent soft business surveys and risks to the outlook for GDP across the euro area are backing up the need for the ECB to take immediate action and reduce rates further into 2025 to boost growth.
- After a busy few weeks of key US data, we have a slightly quieter week ahead, kicking off with the Columbus Day holiday today. Tuesday sees the release of the Empire Manufacturing Survey which will likely show that business conditions worsened during October. Both weekly jobless claims and Retail Sales are released on Thursday, with sales expected to match August’s modest growth as consumer spending remains cautious and growing at a modest pace. The week wraps up with Industrial Production, Business Inventories and housing data – which are likely to be impacted by recent hurricanes and storms.
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