The minutes of the Fed, the ECB and all eyes on inflation in China

Euro, Hong Kong dollars, US dollars, Japanese yen, British pounds and 100 Chinese yuan banknotes are seen in this illustration, in Beijing, China on January 21, 2016. REUTERS / Jason Lee / File Photo

July 2 (Reuters) – Minutes of the June US Fed and ECB meetings, plus the latest inflation data from China – here’s a quick tour of the main economic events and themes for next week which will be processed by Reuters offices.

UNITED STATES

The week following the U.S. wage report is typically one of the lightest of the month in terms of economic reporting, and next week is no exception.

That said, the week features a landmark and market-shocking publication: the minutes of the Federal Reserve’s June meeting, when officials opened the debate on how to end mid-market bond buying. crisis and signaled interest rate hikes closer than before. thought. Read more

Reading from the Federal Open Market Committee meeting on June 16-17 at 2:00 p.m. EST (6:00 p.m. GMT) will highlight the depth of the division among the 18 policymakers at the Approaching a critical turning point for monetary policy in the world’s largest economy – and now booming. Four signs indicating what to look for:

Inflation: With inflation exceeding the Fed’s 2% target, how deep is tolerance for this exceeding among officials?

Employment: Will some policymakers push the theory that an outright return to pre-COVID employment levels is unlikely, raising questions about their “maximum employment” goal?

Taper of bonds: The debate on taper is fully engaged. Questions include when and how quickly they begin to cut back on purchases of $ 80 billion a month in treasury bills and $ 40 billion in mortgage-backed securities.

Interest rates: is the debate moving towards an earlier movement? Projections by FOMC members put forward the median expectation of a first rate hike to 2023 from 2024 at the June meeting and a substantial minority of members circled 2022 for the first hike.

EUROPE

In Europe, concerns about the impact of new variants of the coronavirus on summer tourism – crucial for southern economies like Portugal, Greece, Italy and Spain – will continue to dominate next week, as bookings of hotels are well below pre-pandemic levels.

On Tuesday, the UK budget watchdog, the Office for Budget Responsibility, releases its annual report on the risks ahead for public finances with a focus this year on the damage caused by COVID-19, climate change and the implications of higher interest rates for debt service charges.

The European Central Bank publishes the minutes of its political meeting in June on Thursday. ECB observers will also be on the lookout for news from a series of meetings scheduled in the coming weeks to refine its strategic vision.

The Bank is keen to revise its inflation target – currently set at nearly 2% but not exceeding 2% – but sources said large differences remain among key policy makers. The goal is to complete the exam by September.

ASIA

In Asia, the Australian central bank will likely leave its cash rate at an all-time high on Tuesday and take a “flexible” approach to its bond buying program. The economic results far exceed expectations, but recent COVID outbreaks across the country and a slow rollout of vaccination add risks to the outlook. Already, analysts expect the RBA to be one of the slowest central banks in the developed world to eliminate stimulus in times of crisis.

Malaysia’s central bank holds its policy meeting on Thursday with no expected changes. The focus will be on the prospects for recovery.

Finally, China will release new inflation data on Friday. The focus would be on the cost of raw materials, which have skyrocketed due to higher commodity prices, and whether these increases are passed on to the consumer.

Reports from Reuters offices; compiled by Mark John, Dan Burns, Sam Holmes; Editing by Ana Nicolaci da Costa

Our Standards: Thomson Reuters Trust Principles.


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