UPDATE: Major economic data releases from China, the US, and the UK are set to shake market expectations this week, with key figures on GDP, inflation, and employment looming large.
On Monday, China will unveil its Q4 and full-year GDP data, with growth anticipated to soften to 4.4% year-over-year, down from 4.8% in Q3—marking the slowest pace in nearly three years. Analysts predict that 2025 growth will remain around 4.9%, aligned with the government’s target of ~5%. However, persistent domestic demand issues and a struggling property sector could necessitate further policy support from the People’s Bank of China (PBoC), with expectations of a 10 basis point rate cut in Q1.
Meanwhile, the Bank of Canada (BoC) will assess inflation data on Monday, as analysts forecast that consumer price index (CPI) growth may influence future rate adjustments. Currently, markets lean towards predicting a rate hike will be necessary by 2026, despite ING’s caution that such expectations may be premature.
Attention turns to Tuesday, when the Bank of Japan (BoJ) is expected to maintain its Loan Prime Rates (LPRs). The previous LPRs have remained unchanged for seven consecutive months, with the one-year LPR at 3.00% and the five-year LPR at 3.50%. This stability amidst inflation that has consistently exceeded the BoJ’s 2% target indicates a watchful approach towards future policy normalization.
As the week progresses, the UK will release key employment and CPI data. On Tuesday, the unemployment rate for November is anticipated to dip slightly to 5%, signaling a marginal improvement in the labor market. However, the ongoing challenges suggest that wage growth may slow, reinforcing expectations for additional easing from the Bank of England (BoE).
Wednesday will bring UK CPI data, with predictions indicating a rise to 3.3% year-over-year, primarily driven by recent budget measures. The BoE’s upcoming February Monetary Policy Report will incorporate these developments, potentially impacting future rate decisions.
The US will take center stage on Thursday with the release of personal consumption expenditures (PCE) data. As the Federal Reserve’s preferred inflation gauge, analysts expect the delayed PCE figures to reflect increased price pressures, with forecasts estimating a month-over-month rise of nearly 0.5% for December. This could elevate annual PCE rates to between 2.8% and 2.9%, reinforcing the Fed’s cautious stance on interest rates amid persistent inflation.
Finally, economic forecasts will culminate on Friday, with multiple countries releasing flash PMIs. The UK is expected to show stable activity levels against a backdrop of economic uncertainty, while the Eurozone grapples with geopolitical tensions and energy prices.
As these developments unfold, market participants are urged to stay alert, as the results could significantly sway monetary policy directions in key global economies. Keep an eye on the latest updates and analyses as the week progresses, with pivotal economic indicators set to shape financial landscapes worldwide.
