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Diary: Fed, ECB, BoE, Bitcoin Frenzy

The global outlook this week will be dominated by central banks with the standout as usual being the two day meeting of the US Federal Reserve ending on Thursday and the widely expected rate rise from America’s central bank.

The Fed’s meeting will be one of a number of central bank meetings around the world - Thursday sees meetings from the European Central Bank, the Bank of England and their counterparts in Mexico, Colombia, Chile, Indonesia, Ukraine and Turkey

In the US there will be the continuing noise around tax and he surge in Bitcoin, but the focus will be on the Fed’s meeting and the statement early Thursday which is expected to announce the third increase in US interest rates a this year and for the fifth time in this cycle.

The solid November jobs report and its 228,000 new jobs guarantees a rate rise this week, even if wages growth remains weak at an annual 2.5% rate.

The AMP’s chief economist, Dr Shane Oliver says a rate rise “ ill be no surprise.”

“While the Fed and current Chair Yellen is likely to express concern about ongoing sub target inflation it is likely to reiterate that this is expected to be temporary, particularly with growth running strong and likely to receive a further boost next year from tax cuts.

“In fact, while the Fed is likely to reiterate that interest rate increases will remain gradual the “dot plot” of Fed officials’ expected interest rate increases for next year is likely to move up from three hikes to four,” Dr Oliver wrote. at the weekend.

So far as US data is concerned, the key releases will be inflation figures for November to be released Wednesday night our time, which is expected to show a rise in headline inflation to 2.2% year on year (thanks to higher oil prices) but core inflation to remain at 1.8% annually, while November retail sales (on Thursday night, our time) will probably show a gain of around 0.3%, according US forecasts.

On top of these major releases will be the vital data on job openings (tonight), small business confidence (tomorrow night ), the Markit business conditions PMIs for December (Thursday night) and industrial production (Friday night).

In Europe the ECB (Thursday night, our time) is likely to do nothing except express continuing confidence in Eurozone growth. Like in most major economies (bar the UK) inflation remains well below the ECB’s target so it’s unlikely to make any changes to monetary policy having already extended its QE program out to September and committed to not raising rates until after it ends.

Eurozone business conditions PMIs for December to be released Thursday are likely to remain strong and confirm the strength of he continuing rebound.

European leaders gather in Brussels on Friday for a summit to discuss progress on Brexit, grant their blessings for the second phase of talks on trade and future relations, and to debate the economic and monetary union.

The meeting comes a week after Britain reached a historic deal on Brexit terms, enshrining special rights for 4 million citizens and paying 40 billion euros to 60 billion euros in a deal that clears the way for trade talks next year.

In Asia Chinese economic activity indicators will be released Thursday and according to Dr Oliver are expected to show retail sales growth remaining around 10.3% year on year, industrial production growth stuck at 6.2% and investment slowing to 7.1%. Money supply and credit data will also be released.

In Japan the Tankan business survey on Friday should show a further improvement in business conditions after Japan’s third quarter GDP was raised to an annual growth rate of 2.5% on Friday.

In Australia, Dr Oliver says we can expect Australian Bureau of Statistics data for the September quarter, to be released on Tuesday, to confirm a sharp slowing in national home price growth to around 0.7% quarter on quarter.

The NAB business survey tomorrow is forecast to show continued strength in business conditions and confidence and consumer confidence on Wednesday to remain weak.

The major local release is the November labour market data on Thursday and Dr Oliver says it should show a 20,000 gain in jobs and unemployment remaining unchanged at 5.4%.

On the corporate area, annual meetings will include the NAB and Orica on Friday, Elders on Wednesday. The major meeting will be Tatts tomorrow which should approve the merger with rival Tabcorp.

View More Articles By Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.



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