ECB Stays on War Alert Preparing for Next Rate Hike

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Data will point to the challenges faced by the new premier. Public-sector finance numbers come on Tuesday along with jobs and wages. Inflation on Wednesday is projected to have slowed to 2.7%. Thursday will bring retail sales and the latest PMI readings.

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Aside from the ECB decision, a highlight in the euro zone will be Germany’s ZEW survey, a gauge of investor sentiment which may offer reaction to economic reform measures approved this month. 

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In Bulgaria, meanwhile, from Wednesday, lawmakers may discuss a final motion for a budget bill for 2026. It features a deficit of 5.7%, a level not seen for decades and well above the European Union’s 3% limit. 

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Hungary’s central bank is poised to cut rates for a second straight meeting on Tuesday as inflation subsides and the country’s assets continue to be buoyed by the ouster of Viktor Orban and prospects for future euro adoption. 

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Key African central banks from Nigeria to South Africa will deliver monetary decisions. With oil prices climbing again after the resumption on a blockade of the Strait of Hormuz, they’re likely to keep them higher for longer.

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Nigeria and Ghana’s policymakers are expected to stand pat, leaving their key rates at 26.5% and 14% respectively. South Africa is seen hiking again by 25 basis points, to 7.25%. Its call will weigh on neighboring Eswatini and Lesotho, whose currencies are pegged to the rand.

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In the Middle East, Turkey’s central bank is expected to keep its rate steady at 37% as policymakers assess the impact of the Iran war on the inflation outlook.

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And in Russia, policymakers will weigh whether to continue reducing borrowing costs or pause after a spike in inflation triggered by surging fuel prices in the face of ongoing Ukrainian drone strikes on oil refineries. 

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Latin America

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Analysts are expecting some incremental shifts in Mexico’s mid-July consumer prices after a pronounced bout of disinflation.

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Data for the second half of June showed that the headline print had decelerated to a five-year low of 3.18%, down from 4.63% in mid-March and within hailing distance of the 3% target, while the core print came in at 3.94%.

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Latin America’s No. 2 economy is also slated to serve up June unemployment, along with retail sales and GDP-proxy data for May. Joblessness has been running below 3% since August 2024, while April’s sales and economic activity figures beat analysts’ estimates.

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In Argentina, GDP-proxy readings for May are likely to bounce back after some underwhelming numbers in April as a few sectors — notably agriculture and mining — outperform the overall economy. South America’s second-biggest economy will also publish June trade data after posting a record monthly surplus in May.

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Colombia on Tuesday will report GDP-proxy figures for May in addition to the trade balance and imports for the month. Higher oil prices are bolstering exports, but robust domestic demand that’s sustaining import growth has analysts expecting yet another trade deficit.

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Colombia’s economy is expected to slow this year from 2025, and President-elect Abelardo de la Espriella must walk a tightrope if he’s to get the government’s finances in order and deliver on pledges to stoke faster growth.

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Paraguay’s central bankers may be inclined to keep their rate at 5.5% for a fifth consecutive month. The bank on Thursday marked up its 2026 growth forecast to 4.5% from 4.2% while cutting its inflation forecast to 3.3%.

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—With assistance from Anup Roy, Mark Evans, Reade Pickert, Robert Jameson, Monique Vanek, Beril Akman and Tony Halpin.

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