0931 GMT January 25, 2020
Lagarde, who took the reins on Nov. 1 from Mario Draghi, will speak in Berlin at a time when policy makers at the ECB are split over dwindling stimulus tools and the economy is flirting with recession. She may use the opportunity to tell governments, including Germany’s, to do more to boost demand.
“Lagarde takes over against a backdrop of flagging growth and stubbornly low inflation,” said Jamie Rush, chief European economist at Bloomberg Economics. “Stimulus options are limited and the Governing Council is divided. She’ll have a fight on her hands to turn the euro area around.”
Europe, Middle East and Africa
On Wednesday and Thursday, Lagarde will get an insight into how Germany is doing, with the release of first factory orders and then industrial production for Europe’s largest economy. The European Commission will offer its own verdict on the outlook on Thursday, when it publishes forecasts for the region.
In the UK, the Bank of England’s Monetary Policy Report (just renamed from the Inflation Report) is also out on Thursday. No change in interest rates is expected, so the focus will be on new economic predictions and Governor Mark Carney’s press conference. Brexit uncertainty is still the big factor for the outlook, and now there’s a general election to throw into the mix.
Turkey on Monday is likely to report that inflation fell to the lowest level in almost three years, as central bank Governor Murat Uysal unwinds crisis-level monetary settings put in place following last year’s lira crash. In South Africa, President Cyril Ramaphosa will host an investment conference that last year won him more than $20 billion in pledges, but the economic outlook is dire. Tunisia’s inflation release on Monday could be a rare bright spot for the economy; inflation has eased into single digits from 25-year highs last year.
Four eastern European central banks deciding on rates this week can sit out the global push for looser monetary policy as their economies are still growing healthily and inflation is hovering above or near their targets. Romania, Poland, the Czech Republic and Serbia are all expected to leave benchmark borrowing costs unchanged.
The US and Canada
Federal Reserve officials seem to be planning a pause after cutting interest rates three times. But a lot will spend the week discussing the outlook. Fed Bank of San Francisco President Mary Daly speaks Monday, while Dallas’s Robert Kaplan and Minneapolis’s Neel Kashkari follow on Tuesday. Charles Evans of Chicago, John Williams of New York and Patrick Harker of Philadelphia get their turns on Wednesday. Kaplan and Raphael Bostic of Atlanta speak on Thursday and Daly goes again on Friday.
It’s a light week for data with orders for durable goods and factories expected to show declines on Monday. The trade balance on Thursday will be monitored for effects from the US-China trade war. Canada releases jobs data for October on Friday.
Australia, Malaysia and Thailand will decide on interest rates. The Reserve Bank of Australia is expected to pause on Tuesday after three interest-rate cuts this year brought the benchmark to a record-low 0.75 percent and spurred speculation among economists that unconventional policies will soon be needed to get inflation back into the central bank’s target range.
Most economists expect Malaysia to hold too on Tuesday, according to Bloomberg’s survey. There’s pressure on Thailand to ease to take some steam out of the baht, which is one of the world’s strongest currencies this year.
Chinese exports, data for which is out on Friday, may have extended declines in October after the US imposed another round of tariffs. The Philippines publishes a gross domestic product report on Thursday with Bloomberg Economics predicting an acceleration in the third quarter, while Indonesia follows the same day with the expectation it will show growth was little changed.
Inflation is likely to have slowed further in Brazil in a report set for release on Thursday, consolidating the view that the central bank will cut interest rates again in its final meeting of the year.
The benchmark IPCA index for October is forecast to decline to 2.53 percent, the lowest in two years. On Tuesday, the country’s central bank will release minutes of the latest monetary policy meeting, when it slashed the Selic rate to a record-low five percent.
Mexico consumer price inflation
Meanwhile, Mexico’s consumer prices are seen stabilizing at three percent, the slowest since 2016, with the stagnation of the economy also providing room for further rate cuts. And Peruvian policy makers will debate on Thursday whether to leave their borrowing costs unchanged. Rates are at a nine-year low after a reduction implemented in August.