Central banks, led by the US Federal Reserve, will dominate the coming week globally, but no one is expecting a rise in US interest rates.
However they are looking to the Fed to provide an updated guidance as to when rates might start rising for the first time since 2006.
And apart from the Fed meeting, a board meeting for 21st Century Fox in the US tomorrow night promises more details about the reports last week that there will be changes at the top of the Murdoch family run company.
But it will be the two-day meeting of the Fed that markets and investors around the world will be looking to when it starts tomorrow night, our time, with the usual post meeting statement, updated economic forecasts and the usual quarterly media conference by chair Janet Yellen in the public arena by 6am Thursday.
The updated economic forecasts along with the Fed’s closely scrutinised dot plot (in which each dot represents each Fed member’s view of where the central bank’s Federal funds rate is expected to be in the future) will dominate market thinking which is looking for a rate rise from September onwards.
And while the markets do not expect the Fed will increase interest rates until September, they are watching to see if Ms Yellen remains concerned about low inflation, which could keep the central bank from moving.
And some economists say the rising uncertainties about Greece and the eurozone could stay the Fed’s hand for much longer than currently expected.
The AMP’s chief economist Dr Shane Oliver said at the weekend, “The recent improvement in US economic indicators have come too late, and the labour market improvement is not yet strong enough, to bring on a rate hike at Wednesday’s Fed meeting.
“But the Fed is likely to signal that it remains on track to hike rates later this year providing economic data continues to improve giving confidence that inflation will rise back to target.”
As a result markets will trade cautiously until early Thursday.
Other central banks are in the public eye as well.
The Reserve Bank of Australia will publish the minutes of its June meeting tomorrow morning. They will confirm the bank remains worried about the Sydney housing boom and the weakness of demand in the wider economy.
Apart from the minutes from the June board meeting, there are speeches by RBA officials Assistant Governor, Economics, Christopher Kent (later today) and Assistant Governor, Financial Markets Guy Debelle (tomorrow). These will be watched for any more clues regarding the outlook for interest rates.
The Swiss National Bank announces its interest rate decision on Thursday. European economists expect the Bank will leave interest rates unchanged at -0.75%.
The Bank of Japan is also expected to keep its monetary policy programme unchanged, with a press conference set to follow its announcement from governor Haruhiko Kuroda on Friday.
In London The Bank of England also publishes minutes from its June meeting (Wednesday night).
Central banks in Norway, Russia, Morocco and Uganda are also set to release policy decisions, while European Central Bank president Mario Draghi is due to speak on economic and monetary affairs at the European Parliament in Brussels.
All in all a big week for central banks to jawbone and guide markets towards looming changes in the US.
On the data front in the US, reports will be released on industrial production and the monthly home builders’ conditions index (both tonight), housing starts and permits for May (out Tuesday night, our time).
May CPI inflation data on Thursday night is expected to show an 0.5% monthly gain in headline inflation on the back of higher gasoline prices, but the annual rate is likely to remain at zero. (Producer prices last month were up 0.5% on a headline basis, but the core rate was up a tiny 0.1%.)
Core US inflation is likely to show an 0.2% monthly gain with the annual rate falling back to 1.7% which the Fed will want to see rise in coming months.
Tomorrow night’s board meeting at 21st Century Fox is expected to confirm the elevation of James Murdoch to CEO and Lachlan Murdoch to co-executive chairman.
The moves are of interest because they are happening in a Murdoch family company – but one with minimal involvement in Australia.
Investors will also keep their eyes on negotiations between Greece and its creditors as a deadline looms for the country to reach agreement – but from reports at the weekend it looks unlikely that anything firm will be agreed to in the short term.
And in China on Thursday, house price information for May and the first five months of the year are due to be updated in China.
