BOE Is Probably About to Cut Rates Despite a Spike in Inflation

Article content

Following a disappointing July jobs report and the Federal Reserve’s decision to hold rates steady, investors will monitor comments from a handful of central bankers this week. Lisa Cook, Susan Collins, Mary Daly, Raphael Bostic and Alberto Musalem are slated for public events.

Article content

Meanwhile, investors will watch for any hints from the White House on who might be nominated to fill Adriana Kugler’s seat, after the Fed board member announced on Friday that she would step down.

Article content

Even before her early departure, Treasury Secretary Scott Bessent had suggested the administration might propose a replacement for Kugler who’d then be elevated into the post of Fed chair when Jerome Powell’s term ends in May. 

Article content

Jobs data for July will offer the latest snapshot of the Canadian job market after a surprise jump in employment in June suggested resilience. International goods trade for June may show weakened exports to the US as tariffs start to reshape trade flows.

Article content

The US trade data will indicate the proportion of Canadian exports being sent there under the USMCA agreement, a tariff carve-out.

Article content

Article content

Article content

Asia

Article content

Key readings on trade, economic growth and inflation are scheduled across the region. The releases get under way on Tuesday, with a reading of July consumer prices for South Korea, set to show little change from a year ago. 

Article content

Inflation reports are also on tap for the Philippines the same day, followed by Taiwan, Vietnam and Thailand on Wednesday. Price growth has largely been contained across the region, and central banks are looking to cut rates.

Article content

Second-quarter GDP is in the spotlight on Tuesday in Indonesia, seen broadly unchanged from the prior year, and on Thursday in the Philippines, where economists expect an uptick.

Article content

Trade is in focus following Trump’s Aug. 1 reciprocal levies announcement. Frontrunning to get ahead of these tariffs has elevated exports for many countries, so the readings for July may be among the year’s strongest before an anticipated pullback.

Article content

The insight into trade activity begins Wednesday with figures from Vietnam, which in June notched another month of double-digit growth. 

Article content

Article content

Australia and China — which has faced the steepest trade restrictions on sales to the US — report export data on Thursday. Semiconductor powerhouse Taiwan closes out the week the following day.

Article content

Elsewhere, Malaysia will disclose July industrial production on Thursday, which should provide more insight into how Southeast Asian economies are handling the tariff uncertainty after PMI data showed the weakest activity outlook since the pandemic. 

Article content

New Zealand reports labor market data, Singapore releases June retail sales, and Japan will report an array of financial data including foreign bond buying and household spending throughout the week.

Article content

Meanwhile, India’s central bank meets Tuesday, with Bloomberg Economics anticipating a dovish pause, holding the repo rate at 5.5% after easing 100 basis points this year. 

Article content

Article content

Europe, Middle East, Africa

Article content

Switzerland, shocked at Trump’s imposition of a 39% tariff, will be in focus on Monday as markets reopen there after a national holiday. Officials are likely to redouble efforts to secure a trade deal in the coming days.