The world’s major economies will face inflation, disease and war this week in Indonesia


The magnitude of the consumer price shock afflicting many member countries is unprecedented since the founding of the group at the turn of the last century, and has been fueled by persistent supply concerns and soaring oil costs. energy. Linked to this latest pressure is the military tension with Russia that could yet escalate into conflict in Ukraine.

The mix of challenges facing finance ministers and central bankers meeting in Jakarta is likely to prompt a less optimistic view than that offered in their statement from Washington in October, when officials accepted some inflation as “transitional”.

Thursday and Friday’s rally comes a week after US data showed consumer prices rising at the fastest rate in 40 years, fueling expectations of accelerated Fed tightening. Even the previously accommodative eurozone has changed its tune, while Argentina and Turkey, both members of the G-20, now have inflation hovering around 50%.

The global price shock, however, does not affect the group uniformly. Japan, which has long struggled to generate sustainable inflation, could see another slowdown in data expected this week, and China should also signal easing pressures.

What may well emerge from the meeting is the extent to which many governments are tackling newer issues than the coronavirus, even as the pandemic continues, albeit with the often less dangerous omicron variant.

Elsewhere, UK inflation could pick up again and US producer prices could show some moderation. On the monetary front, the Federal Reserve will issue a Minutes of Decision and the President of the European Central Bank will address lawmakers.

What Bloomberg Economics says:

“If labor market and CPI data continue to show little sign of slowing inflation, then the Bank of England should raise interest rates in March.”

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Next week, investors will receive a second portion of January inflation data when the government releases producer price figures. Economists forecast that, on an annual basis, the measure of prices paid to producers rose at a more moderate pace for a second month.

A sustained easing of price pressures at the producer level would suggest a possible easing of the recent acceleration in consumer inflation. Last week, the US consumer price index jumped a surprising 7.5% from January last year, a four-decade high.

On Wednesday, investors will analyze the minutes of the January meeting of Fed officials to gauge central bankers’ appetite for a more aggressive approach to policy normalization. Fed Chairman Jerome Powell said last month that they were ready to raise rates in March and did not rule out moving at every meeting this year – an outcome that Goldman Sachs, for its part, is waiting for. now.

The U.S. data calendar for the week ahead also includes reports on January retail sales, industrial production, housing starts and existing home purchases.

Asia

Market watchers will focus on Japanese yields after the Bank of Japan acted to stem the upward move. The world‘s third-largest economy released growth figures on Tuesday that should show the economy rebounding strongly, at least before the omicron business soars. Meanwhile, inflation in Japan is expected to have slowed in January.

The minutes from the last meeting of the Reserve Bank of Australia may shed more light on the likelihood of a possible rate hike later in the year. Labor market data released on Thursday could support more optimism Down Under, although Covid restrictions could still upend the numbers.

South Korea’s employment figures will be reviewed by Bank of Korea Governor Lee Ju-yeol ahead of his final policy meeting later this month.

China’s central bank will release the results of its monthly liquidity operation on Tuesday, while the latest inflation data will land there on Wednesday.

Elsewhere in the region, the central bank of the Philippines meets on Thursday, while Singapore releases its 2022 budget on Friday.

Europe, Middle East, Africa

Inflation in the UK in January has probably taken another step en route to a peak that the Bank of England finally sees above 7%. While the Economist’s median forecast for that data on Wednesday is 5.5%, the forecast range is wide, from a moderation at 5.1% to another jump of up to 6%.

The previous day’s labor market report is also likely to catch the eye of BOE policymakers, with signs of tightening likely to pave the way for another rate hike. Governor Andrew Bailey blocked a half-point hike sought by some of his colleagues earlier this month, but investor bets now suggest such a move will come soon enough.

In the euro zone, meanwhile, testimony from ECB President Christine Lagarde on Monday will be another opportunity to guide investors after her recent hawkish pivot fueled expectations for rate hikes this year. Last week, however, she repeatedly stressed that any tightening would be gradual.

The main data in the euro region will be industrial production for December on Wednesday, which will indicate the health of economic growth in the overall fourth quarter.

In Poland and the Czech Republic, inflation data could show a further acceleration towards 10%. A result above this pair prompts policymakers in Prague to signal more rate hikes.

Turkish monetary authorities may only welcome consumer price increases of this magnitude; inflation there was close to 50% in January, more than three times the level of the reference rate. Nonetheless, the central bank is expected to maintain its hold policy on Thursday.

In Israel, Tuesday’s data could show price growth above 3% for the first time in more than a decade, which could tip the central bank toward a more hawkish stance.

Namibia could raise its policy rate by 25 basis points on Wednesday to preserve its monetary peg with neighboring South Africa and ensure its economy does not lack foreign investors seeking higher returns.

On the same day in South Africa, inflation data is likely to remain near the ceiling of the central bank’s 3%-6% target range, underscoring the dilemma policymakers face balancing the economic fallout from the pandemic.

Latin America

Earlier this week, the central banks of Brazil and Chile release closely watched surveys of economists and traders, respectively. The two monetary authorities have published the minutes of their last meetings in recent days.

The Colombian Statistics Agency is also releasing a series of December data, including on industrial production, retail sales, manufacturing and trade.

Look for data released Tuesday to show that a strong but uneven economic rebound in Colombia has pushed output even further above pre-pandemic levels. The Ministry of Finance forecasts GDP growth of 9.7% in 2021, the fastest pace in decades, followed by a 5% expansion in 2022.

A light week for Brazil sees the release of some early inflation readings for February along with weekly trade numbers. Argentina releases its national and Buenos Aires inflation figures for January on Tuesday, while Peru releases its December economic activity report as well as labor market measures in Lima, the nation’s capital.

At the end of the week, the Uruguayan central bank signaled that a second consecutive increase in interest rates of 75 basis points is underway, which would take its key rate to 7.25%. The monthly survey of economists from the Colombian central bank may give a clue as to the effect of the continued acceleration in inflation on expectations for 2022 and 2023.

This story was published from a news feed with no text edits. Only the title has been changed.

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