This week is packed with events that could move markets, from the release of the minutes of the July U.S. Federal Reserve meeting to inflation reports in Europe and Asia, along with important monetary decisions in New Zealand and China.
Federal minutes highlight the assessment of trade risks ahead of the September decision.
British inflation is likely to rise again, putting the Bank of England in a difficult position regarding interest rate cuts.
The Reserve Bank of New Zealand is preparing to resume easing with a new 25 basis point cut.
Inflation in Japan may decline, but the Bank of Japan is moving forward with its path towards another rate hike.
Federal minutes under scrutiny ahead of September meeting.
Investors are awaiting the minutes of the U.S. Federal Reserve's meeting scheduled for August 20, looking for signals on how policymakers assessed the risks of tariff impacts, and whether Jerome Powell's hawkish stance during his recent press conference reflects a collective view within the committee or merely an attempt to contain divisions.
Markets are pricing in a rate cut in September after weak employment data in July and negative revisions for previous months. With an additional jobs report due before the next meeting, the labor market remains the critical factor. The minutes will reveal how willing the Fed is to embark on easing if weaknesses deepen.
British inflation puts the Bank of England in a difficult position.
British inflation will be at the forefront of market concerns on August 20, with expectations of the annual index rising to 3.7% from 3.6%. Food, fuel, and accommodation prices add upward pressure, while service inflation is expected to rise to 4.8%.
The Bank of England had expected inflation to reach 4% in September, raising doubts about the pace of interest rate cuts. While a cut in November remains the base case scenario, any new upside surprises could delay easing until 2026, making the July reading a critical test for the bank's credibility and the price path.
New Zealand Bank resumes easing cycle.
The Reserve Bank of New Zealand is expected to cut interest rates by 25 basis points to 3% at its meeting on August 20, after keeping them stable in July.
Although food and energy prices keep inflation high, the deterioration of the labor market and the accelerating loss of economic momentum pushed the bank towards resuming easing. Expectations indicate further cuts in the coming period, even below neutral levels, amid weak demand and declining confidence.
China keeps benchmark interest rates unchanged.
Chinese banks will keep the loan prime rate (LPR) unchanged in August at 3.0% for one-year terms and 3.5% for five-year terms, for the third consecutive month.
However, the weak credit data for July increased pressure on the People's Bank of China to act. Analysts expect a 10 basis point cut in interest rates, along with a 25 basis point reduction in the reserve requirement ratio before the end of September, which will later be reflected in benchmark interest rates.
Japanese inflation will not halt the tightening path.
Markets are awaiting Japan's inflation data on August 22, which is expected to show a slowdown in the overall index to 3% year-on-year from 3.3% in June, while core inflation (excluding food and energy) remains at 3.4%.
Despite this slight decline, strong wage growth and resilient consumption bolster the Bank of Japan's position to proceed towards another 25 basis point rate hike in October, indicating its confidence in the price stability framework despite global uncertainty.
Geopolitics: The Trump-Putin summit raises further questions.
Outside the economic framework, global politics remains an influencing factor. U.S. President Donald Trump and his Russian counterpart Vladimir Putin met in Alaska for the longest bilateral meeting since 2018. Trump described the talks as "extremely fruitful," but regional disputes remain unresolved.
Trump's indication that Ukraine should move "directly" towards a peace agreement, bypassing the option of a ceasefire, was interpreted as a strategic gain for Putin, giving him additional time on the ground. While both sides spoke of progress, Kyiv and its European allies remained skeptical. Ukrainian President Volodymyr Zelensky is set to visit Washington on August 18 to rally Western support.
Markets viewed the summit as a factor reducing the risk of immediate U.S. sanctions on Russia, but the ongoing uncertainty will keep investors cautious, especially in energy and defense markets.