• MON: Japanese Market Holiday, Chinese LPR (Sep)
• TUE: US Richmond Fed (Sep)
• WED: SARB Announcement, Global Flash PMIs (Sep)
• THU: Chinese President Xi’s state visit to the US, Norges Bank Announcement, Riksbank Announcement, SNB Announcement, Banxico Announcement, Japanese Flash PMI (Sep), Australian Jobs Report (Aug), German Ifo Survey (Sep), Canadian Retail Sales (Aug)
• FRI: China Mid-Autumn Festival Market Holiday, US Durable Goods (Aug)

WEEK AHEAD

CHINESE LPR (MON): The PBoC is expected to maintain its 1yr LPR at 3.00% and 5yr LPR at 3.50%, marking a 16th consecutive month of unchanged rates. Despite continued weakness in domestic demand, policymakers have shown little appetite for further broad-based easing, with pressure on commercial bank margins and a more hawkish global rates backdrop limiting scope for cuts. Policymakers are instead leaning more heavily on liquidity measures and targeted support, with any unexpected LPR reduction likely to signal greater concern over the domestic growth outlook.

SARB ANNOUNCEMENT (TUE): The South African Central Bank is expected to convene on Tuesday, with markets split on what the Bank will do; current pricing indicates a 52% chance of a 25bps hike. At the meeting in July, rates were surprisingly left on hold, with Amundi analysts highlighting the risk to credibility if rates are left on hold again. Inflation remains outside the Bank’s inflation target band, with the July figure printing at 4.3% Y/Y. Although this may point to a hike, the most recent inflation expectations gauge could help the dovish members of the MPC argue for a hold. Average inflation expectations for 2026 were unchanged at 4.4%, while expectations for 2027 and 2028 fell to 4.0% and 3.8%, respectively (prev. 4.2% and 3.9%). Another factor supporting the doves is the most recent growth figure, with the Q2 GDP metric contracting 0.2%. At the July meeting, the MPC voted 4-2 in favour of a hold, with the two dissenters voting to hike the policy rate by 25bps, while the statement highlighted downside risks to growth and upside risks to inflation.

UK FLASH PMI (WED): UK Composite PMI is expected to remain steady at around 52.5 in September, with Services also seen at around 52.5 and Manufacturing at 51.7, signalling continued but modest private-sector growth. Services are expected to remain the main driver of activity, while manufacturers continue to face elevated energy, freight and input costs. Employment also remains relatively weak as firms contend with higher labour costs. A stronger-than-expected release would point to continued resilience in the UK economy and support the BoE remaining cautious on the path for rates.

EZ FLASH PMI (WED): Focus for the EZ Flash PMI will be on whether the region’s strong activity can continue for another month despite the sustained rise in energy prices. The latest round of hostilities between the US and Iran, and more recently Yemen and Saudi Arabia, may weigh on business sentiment, while persistently elevated prices may result in higher costs. As a reminder, the last report saw the Composite rise to 52.0 (prev. 51.9), highlighting the resilience of the EZ activity picture. For reference, the figure was above the pre-Iran war level of 51.9.

CHINESE PRESIDENT XI VISIT TO US (THU): Chinese President Xi is expected to meet US President Trump in Washington on 24th September for their second summit this year, following Trump’s visit to Beijing in May. Trade will be a key part of discussions, including a potential extension of the existing tariff truce, Chinese purchases of US agricultural goods and Boeing aircraft, US access to Chinese rare earths and critical minerals, and Beijing’s push for relief from US technology restrictions. Taiwan and broader military tensions are also expected to feature, alongside Iran, China’s purchases of Iranian energy, Russia and the flow of dual-use goods. AI is another notable part of the agenda, with both sides having pursued talks on managing risks from advanced systems ahead of the summit. The meeting follows an agreement between the two leaders in May to pursue greater economic and strategic stability, although significant disagreements remain over trade, technology and geopolitics. Markets will be watching for any extension of the trade truce, movement on export controls and critical minerals, and signs of either escalation or de-escalation in US-China relations.

NORGES BANK POLICY ANNOUNCEMENT (THU): There are currently mixed views on whether Norges Bank will lift rates by 25bps or hold rates in September. The August inflation report was mixed, with the headline rising more than expected, while the closely watched CPI-ATE Y/Y rose from the prior reading but remained below the Bank’s own forecast. On the growth side, the latest Regional Network Report highlighted some softness in the Norwegian economy, though perhaps not enough to alarm policymakers leaning towards a hike. Danske Bank writes that the decision will be a “close call” but favours holding rates; SEB believes the Bank will view inflation as too high, leaning towards a hike, but sees it as a “50/50 call”.

SNB POLICY ANNOUNCEMENT (THU): SNB is expected to keep rates unchanged at its September policy meeting, given that inflation remains within the Bank’s 0-2% inflation band. On that note, Swiss CPI M/M topped expectations at 0.4% in August (exp. 0%), while Y/Y rose 0.8% (exp. 0.5%). This was largely due to a weaker CHF and a slight pick-up in energy prices. SNB Chairman Schlegel suggested that while inflation has been moving higher, it remains within the price stability range. There is a broad consensus that rates will remain on hold for the remainder of the year, but views begin to diverge into 2027, with some analysts seeing a hike to 0.25% as likely. Should inflation continue to rise in the coming months, the case for a hike will likely strengthen, but should only really impact market expectations for next year.

RIKSBANK POLICY ANNOUNCEMENT (THU): Riksbank will likely keep rates on hold at 1.75% at its September confab. The decision is backed by the latest inflation report, which was cooler than expected and showed that the upward trend seen throughout the summer months appears to be slowing. Despite inflation moving in the right direction, CPIF Y/Y remains above the Bank’s own forecast, which will keep policymakers cautious about the inflationary picture. As such, SEB believes the Bank will signal a 60% chance of a hike at one of the next three meetings. Further out, SEB believes rates will remain on hold for the remainder of the year, while Nordea sees a November hike. Factors that would favour hikes this year include a resurgence in inflation, persistent pressure on the SEK and further rate hikes by global peers such as the ECB.

BANXICO POLICY ANNOUNCEMENT (THU): Banxico is widely expected to leave rates unchanged at 6.50%. In its latest Minutes from the prior meeting, the Governing Board estimated that it will be appropriate to maintain the reference rate at its current level. In most recent remarks, Deputy Governor Heath stated recent inflation data is very good, but not a victory, and that risk assessment is on the rise, number one factor is persistent services inflation. Heath added there would be no rate cuts in the short-term as it is necessary to check progress on inflation, and a cut might be possible in a year. In its latest forecasts, released end of August, it forecasted 2026 GDP growth at 1.5% (prev. 1.1%) and 2027 GDP growth at 2.0% (prev. 2.1%); sees average annual core inflation in Q4 of 3.5% (prev. 3.4%) and annual average headline inflation in Q4 of 3.5% (prev. 3.5%). As stated in its last confab, headline inflation seen converging to 3% target in Q2 2027. Overall, Oxford Economics continue to expect Banxico to leave the policy rate at 6.50% through the remainder of 2026; they note the fall in core inflation below 4% is encouraging, but persistent services inflation and the risk of further temporary shocks give policymakers little reason to resume easing soon.

JAPANESE FLASH PMI (THU): Japan’s Manufacturing PMI is expected at around 54.8 in September, with Services seen at around 52.6 and the Composite remaining above 53.0, pointing to continued expansion across the private sector. Manufacturing activity remains supported by demand for semiconductors and AI-related equipment, while services continue to benefit from domestic activity and tourism. Price components will also be closely watched amid elevated import costs and signs that firms are increasingly passing higher costs on to customers.

AUSTRALIAN JOBS (THU): The ABS is to release the August Labour Force Report on Thursday, with employment change expected to print at +20k from the prior -15.8k, while the unemployment rate is seen holding steady at 4.5%. In recent commentary, RBA Governor Bullock highlighted that indicators point to labour market conditions remaining close to, but a little tighter than, full employment. Adding to her remarks, she flagged that upside risks to inflation appeared to be materialising, pointing to the Bank’s focus on bringing inflation lower. Although the jobs report will be important, it is unlikely to shift the RBA’s view heading into the September meeting. Markets are currently pricing in a 96% chance of a hike in September; however, Westpac sees a pause in September and has moved its call to a hike in November.

WEEK IN REVIEW

SWEDISH ELECTION (SUN): The centre-left won the 2026 Swedish election, gaining 176 seats versus 173 for Kristersson’s bloc. Polls had suggested that the centre-left, would narrowly win the election, which proved to be the case. Attention now turns to coalition talks and who will be appointed as the new PM, with Social Democrat leader Andersson expected to take the post. As for coalition talks, the Left Party has demanded a role in government, while the Centre Party has ruled out working with the Left Party. Therefore, a likely route to forming a government would see the Social Democrats and Greens govern while requiring support from the Centre and Left parties sitting outside, essentially creating a left-wing mirror of the Tido Agreement formed by the previous government.

CANADIAN CPI (MON): The monthly Canadian inflation data was softer than expected. Headline CPI fell 0.1% M/M, below expectations for an unchanged reading and down from the prior 0.5%, while the Y/Y rate rose to 3.0%, in line with the forecast and prior. Core CPI rose 0.1% M/M, below the 0.2% forecast and prior, although the Y/Y rate accelerated to 2.4% from 2.3%. The average of the BoC’s preferred core measures was unchanged at 2.2%, in line with forecasts. CPI Common eased to 2.6% from 2.7%, while Median was unchanged at 2.0% and Trim remained at 1.9%. The BoC’s policy rate is currently at the low end of neutral, with future decisions set to be guided by the Bank’s inflation outlook. The latest minutes showed members were concerned about persistently high gasoline prices, noting that the Iran conflict had raised market expectations for oil prices, while members also saw a greater risk that inflation could spread into non-energy goods and services. Money markets are currently pricing in around 127bps of tightening by the end of 2027. Analysts at Oxford Economics expect the BoC to hike by 25bps in both October and December, given the recent resurgence in oil prices and the fact that the Fed and other central banks are also tightening policy. However, Oxford does not expect this to mark the beginning of a sustained tightening cycle, instead viewing the hikes as insurance against the oil-price shock generating more persistent inflationary pressures.

CHINESE ACTIVITY DATA (TUE): Chinese activity data was mixed in August and highlighted an uneven economy, as Industrial Production topped forecasts and accelerated to 5.2% Y/Y (exp. 4.8%, prev. 4.5%), while Retail Sales slowed to 0.4% Y/Y (exp. 0.8%, prev. 0.6%), Fixed-Asset Investment YTD fell 7.2% YTD (exp. -7.2%, prev. -6.7%) and the Unemployment Rate unexpectedly rose to 5.3% (exp. 5.2%, prev. 5.2%). NBS noted that August economic activity was generally steady, although the impact of an unfavourable external environment is deepening. Regarding the strong output data, NBS stated that emerging industries continued to grow rapidly, as high-tech manufacturing and digital product manufacturing output rose 16.7% and 15.7% Y/Y, respectively, with new growth drivers contributing to more than 60% of industrial output growth above designated. Conversely, regarding the weak Retail Sales, NBS stated that residents’ ability and willingness to spend should be enhanced and noted that the supply of high-quality goods and services should be improved.

UK JOBS (TUE): The UK labour market continued to cool in July, with the Unemployment Rate holding at 4.9% (exp. 5.0%, prev. 4.9%) and Employment Change slowing to 67k (prev. 83k). Average Earnings ex-bonus remained at 3.5% (exp. 3.5%), while including bonuses eased to 3.9% (exp. 3.9%, prev. 4.2%). More timely indicators were weaker, with August payrolls falling 26k (exp. -5k, prev. -19k) and the Claimant Count rising 27.8k (exp. 8.3k, prev. -11.8k). Overall, the report pointed to further softening in hiring and wage pressures, providing some reassurance to the BoE that domestic inflationary pressures are easing.

FOMC POLICY ANNOUNCEMENT (WED): The FOMC voted unanimously to raise rates by 25bps to 3.75-4.00%. It said the move should help return inflation to target more quickly, while reiterated that inflation remains elevated. Economic activity was described as expanding at a solid pace, domestic spending as resilient and capital investment as robust. Labour-market language was broadly unchanged. The dot plot was hawkish, with the median showing another 25bps hike in 2026. Twelve of 18 participants saw one further hike, four saw two, and two saw none (NOTE: 18 of the 19 participants submitted forecasts; Chair Warsh again did not submit an individual forecast, consistent with his view that publishing projections can unduly constrain the Fed’s future policy decisions). The median rate forecast remained at 4.125% through the end-2027, before easing to 3.875% in 2028, and then to 3.625% in 2029, while its longer-run projection was nudged up to 3.2%. At his post-meeting press conference, Fed Chair Warsh emphasised price stability while describing the US economy and labour market as strong. As expected, he avoided any forward guidance, saying the Fed is “committed to a discipline, not a decision,” and framed the rate hike as evidence of determination to return inflation to target. Warsh also cited economic strength, capital demand and geopolitics behind higher bond yields. Writing after the announcements, analysts at Goldman Sachs said they now expect another 25bps Fed hike in October, citing a more hawkish-than-expected FOMC outcome; it highlighted the 16-2 projection for another 2026 hike, no dissent on the September move, a higher neutral-rate estimate, and Warsh’s emphasis on removing accommodation. Further hikes beyond October are possible, but that is not Goldman’s base case.

US RETAIL SALES (WED): US retail sales rose 1.2% M/M in August, above the expected +0.8% and rising from July’s revised -0.5% print. Core retail sales also impressed as they rose 1.4% (exp. +0.6%, prev. -0.2%), with retail sales ex-gas/autos jumping 1.2% (prev. -0.3%). Retail control rose 1.4%, above Wall St. consensus of 0.4% and the prior -0.4%. For the headline beat, Oxford Economics highlight much of the strength reflected a bounce back in non-store sales, which had fallen sharply in July, and was largely seasonal noise driven by shifts in the timing of Amazon’s Prime Day shopping event. Rising gas prices also boosted gasoline station sales. Even accounting for that, gains in most spending categories were decent, led by discretionary sectors such as food services, electronics, and sports and recreation. As Oxford Economics writes, the headline rebound was juiced by a rebound in non-store sales, but the underlying details still point to a decent 2.8% annualized rise in real consumer spending in Q3. The squeeze from higher gasoline prices will intensify heading into the fall, but the tailwind from rising financial wealth means higher-income consumers are so far offsetting that.

BCB POLICY ANNOUNCEMENT (WED): Brazil’s central bank unanimously cut its policy rate 25bps to 13.75%, in line with expectations. It said policy must remain sufficiently restrictive, activity is gradually moderating, but labour markets remain tight, and inflation risks remain unusually high with an upside asymmetry. The total easing cycle will depend on incoming data. The statement acknowledged a clearer improvement in both inflation and activity, but Copom gave no indication that it is preparing to accelerate the easing cycle. Copom reference-scenario forecasts for headline IPCA were revised up to 5.2% (prev. 5.1%) for 2026, and to 3.9% (prev. 3.8% for 2027), with core inflation forecast for 2027 lifted to 4.1% (prev. 3.9%). Overall, Copom’s headline inflation projection for Q1 2028, currently the relevant policy horizon, stands at 3.2%, still above the 3% target. Ahead, Oxford Economics continue to expect 25bps cuts at the next meetings as inflation gradually eases and activity loses momentum. Oxford adds the September communiqué strengthens the case for continued easing, but not for a faster pace. A more aggressive cycle will require clearer evidence that inflation expectations are re-anchoring and underlying inflation is converging sustainably towards target. Oil prices around USD 100/bbl remain an important upside risk, reinforcing the case for Copom to proceed cautiously.

UK INFLATION (WED): UK CPI rose to 3.1% Y/Y in August (exp. 3.1%, prev. 2.9%) and 0.5% M/M (exp. 0.5%, prev. 0.3%), while Core CPI remained at 2.6% and Services CPI was unchanged at 3.4%. The increase was largely driven by higher petrol and diesel prices alongside airfares, while upstream inflation pressures also strengthened, with PPI Input rising 6.1% Y/Y (exp. 5.4%) and PPI Output 3.7% (exp. 3.3%). Overall, the in-line CPI readings did little to alter expectations for the BoE, although sticky services inflation and stronger factory-gate price pressures kept inflation risks tilted to the upside.

BOE POLICY ANNOUNCEMENT (THU): The BoE held the Bank Rate at 3.75% in a 6-3 vote, as expected. Greene, Mann and Pill again backed a 25bps hike, while Lombardelli remained with the majority. The characterisation of second-round effects remained at “Little evidence so far of material second-round effects in price and wage-setting”. However, the MPC said inflation risks are tilted further to the upside than in July and that it is “not appropriate to wait too long” for evidence of second-round effects, while noting that the risk of material second-round effects has increased and is likely to rise further if energy prices remain elevated. The QT announcement, however, was a dovish surprise for gilts. The MPC unanimously agreed on a multi-year plan to reduce the stock to zero by 2034, at an average GBP 46bln a year with GBP 20bln of annual sales, and will retain GBP 120bln of the longest-dated gilts to back banknotes. The BoE is also pausing APF auctions until at least April 2027 while it considers selling gilts directly to the Government. Gilts rallied on the smaller long-end supply, the pause in market sales and the prospect of sales bypassing the market. GBP fell as lower yields and the absence of any hawkish surprises outweighed the tougher inflation language.

BOJ POLICY ANNOUNCEMENT (FRI): BoJ hiked rates by 25bps to lift the short-term rate to 1.25%, as widely expected, with the decision made by a 7-2 vote as Takaichi-appointed board members Asada and Sato dissented. The central bank’s language continued to signal future rate increases, but with no major signs of urgency, as it noted that it will continue to raise rates in response to economic and price developments as well as financial conditions, and will consider the timing and pace of rate hikes while examining the likelihood of realising the baseline scenario and risks. BoJ also reiterated that it will conduct monetary policy as appropriate from the perspective of sustainably and stably achieving the inflation target, and noted that the accommodative financial environment will be sustained after the policy rate change, thereby supporting economic activity. Regarding the dissenters, Asada considered that, with the rate of increase in the Core CPI recently below 2%, it could not necessarily be said that the economic situation was strong and it was desirable for the Bank to maintain the guideline for money market operations, while Sato considered that current economic and price developments did not appear to have substantially accelerated compared with before and, in this context, it was not appropriate for the Bank to raise the policy interest rate at this time. Overall, Ueda’s press conference did not signal any urgency to accelerate the pace of tightening. He said easy monetary conditions are expected to be maintained, adding that rates have tightened but bank lending and asset markets remain accommodative. One hawkish aspect of the presser was Ueda’s suggestion that the BoJ believes the phase of policy has changed. However, he later clarified that this meant the objective is now to stabilise underlying inflation at around 2%, essentially removing the initial hawkish interpretation.

JAPANESE CPI (FRI): Japanese inflation was slightly softer than expected in August, with headline CPI at 1.9% Y/Y (exp. 2.0%, prev. 1.9%), while Core CPI (ex. fresh food) eased to 1.7% (exp. 1.8%, prev. 1.8%) and CPI ex-food and energy was steady at 1.9% (exp. 2.0%, prev. 1.9%). The data showed inflation slowed for the first time in four months, partly reflecting government energy subsidies, while the core reading remained below the BoJ’s 2% target for an eighth consecutive month. Within the details, processed food inflation moderated to 2.7% from 3.0%, lodging prices fell 1.4% and rice prices declined 15.7%, although inflation accelerated for household durable goods, education and recreation durables, and medical fees.

UK RETAIL SALES (FRI): UK Retail Sales rose 0.5% M/M in August (exp. -0.2%, prev. -0.5%) and 2.4% Y/Y (exp. 1.9%, prev. 1.2%), while sales ex-fuel increased 0.6% M/M (exp. -0.2%, prev. -0.9%). The rebound was driven by stronger non-food and online spending, while higher fuel prices weighed on automotive fuel volumes.

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