"Super Central Bank Week" is coming, the European Central Bank may cut interest rates in September, these central banks may "act on the news"

According to Zhitong Finance and Economics APP, this week, central banks of several countries including the European Central Bank, Egypt, South Africa, and Angola will hold interest rate meetings. European Central Bank officials may prepare investors for another rate cut, despite being in the longest summer decision gap in the history of the ECB Governing Council. Due to the need for more time to assess the intensity of persistent inflation pressures, the possibility of a rate cut on Thursday has actually been ruled out, and traders will closely monitor any clues provided by ECB President Lagarde on the outlook for the September 12th interest rate meeting.

At that time, the European Central Bank will have access to Consumer Price Index (CPI) data for the next two months and the latest compiled forecasts. Several policymakers have indicated a preference for taking action at the quarterly meeting where they hold the new forecasts.

By then, officials will also have a clearer understanding of the Federal Reserve's intentions. The latest data shows a general slowdown in US inflation, dropping to the lowest level since 2021, leading to increasing speculation that the Fed will seek a rate cut in September.

Before making a decision on Thursday, the ECB Governing Council will see new data including: May industrial production data released on Monday, expected to show a second consecutive month of contraction, and the final inflation figures for June released on Wednesday.

As Spain has not yet appointed a new central bank governor to succeed Pablo Hernandez de Cos, ECB officials will reduce one voting member this week, as de Cos' term ended just over a month ago and he will not be reappointed.

In addition to questions about the trend in borrowing costs, Lagarde may also be asked about the situation in France. Concerns about France's fiscal outlook have intensified in financial markets following the suspension of parliament after early elections.

David Powell, senior economist for the Eurozone at Bloomberg Economics, said, "The ECB's meeting on July 18 will be closely watched by investors to adjust expectations for the timing of the next rate cut, although rates are almost certain to remain unchanged this month. Lagarde may hint at the next rate cut in September, but is not expected to be too explicit."

Lagarde's press conference may resonate more deeply. Similarly, if ECB officials attend the annual meeting of the Federal Reserve in Jackson Hole, Wyoming at the end of August, it will also attract additional attention.

The 8-week gap between the two ECB interest rate decisions this year is the longest summer pause period for the Governing Council since the most severe period of the pandemic in 2020. For most of its history, the ECB held meetings almost monthly until 2015 when longer intervals were introduced between meetings.

In other countries and regions around the world, retail sales in the United States may decline, while the UK and Canada may face inflation deceleration. In addition, interest rate meetings in Indonesia, Egypt, and South Africa will also be highlights. The latest global economic forecast from the International Monetary Fund to be released on Tuesday will attract investors' attention.

United States and Canada

On Monday, Federal Reserve Chairman Powell will be interviewed at the Economic Club of Washington, where previous data showed encouraging signs of slowing inflation. Investors will closely watch for clues as to whether Fed officials have sufficient confidence in the continued easing of price pressures to proceed with a rate cut.

Powell's activities kick off a week-long series of events for other senior Fed officials, including Fed governors Quarles and Waller, as well as New York Fed President Williams.

Retail sales are a highlight on the U.S. economic data calendar. Economists expect sales to decline in June, partly due to disruptions from cyberattacks affecting auto dealers and declining gas station revenues.

Control group sales, excluding autos, gasoline, food services, and building materials, are expected to slow down. This is an indicator used to calculate Gross Domestic Product (GDP), reflecting the extent to which budget-conscious consumers limit discretionary purchases.

The day after retail data is released on Tuesday, the government is expected to announce June new home construction data, showing a slight increase from the slowest pace in 4 years. Builders benefit from reduced resale market inventories, although demand continues to be restrained by high borrowing costs.

Also on Wednesday, the Fed will release the June industrial production report, as well as the Beige Book on the economic conditions of the Fed's 12 districts.

Meanwhile, in Canada, June inflation data is crucial in guiding the Bank of Canada's interest rate decision on July 24, especially after the unexpected rate hike in May. The central bank will also release second-quarter consumer and business survey data, as well as receive May retail sales data and June preliminary estimates.

Asia

Analysts, investors, and policymakers are closely studying the latest quarterly growth data and a range of monthly data, with the Chinese economy being a key focus in Asia. In other parts of Asia, the Indonesian central bank is expected to keep rates unchanged on Wednesday, while New Zealand will release its latest inflation data on the same day, and Singapore will also announce export data.

Malaysia, Japan, and India will also release trade data this week. Kuala Lumpur will announce its GDP data over the weekend.

Australia's employment growth data to be released on Thursday is expected to show a halving of new job additions.

Data to be released on Friday may indicate that Japan's national price inflation in June is expected to rise to 2.7%, intensifying expectations that the Bank of Japan will consider tapering bond purchases while raising rates later this month

Europe, Middle East, Africa

In the data released, the UK is expected to attract the most attention. The latest consumer price data released on Wednesday may show that the UK's service sector inflation slowed for the fifth consecutive month in June, dropping to 5.6%, still well above the policymakers' target of 2%. The country's latest wage data will be released on Thursday, with quarterly data up to May showing that regular wage growth is expected to drop below 6% for the first time in 20 months.

On Wednesday, the Queen's Speech will also be held, with Prime Minister Keir Starmer using this speech to showcase the new government's efforts to stimulate economic growth in the UK.

Meanwhile, retail sales data for June, scheduled to be released on Friday, may decline, and on the same day, UK Chancellor of the Exchequer Rachel Reeves will release the first public finance data since taking office.

This week's data will be the last important data release before the Bank of England's decision on August 1st, when officials will assess whether to cut interest rates for the first time since the start of the pandemic.

In Africa, data released by Nigeria on Monday showed that inflation in June remained around 34% due to the more stable Naira (Nigerian currency). Analysts expect that starting this month, economic growth may begin to slow down partly due to the high base effect.

In addition, three central bank interest rate meetings are expected to be held. Egypt is expected to maintain its interest rate at 27.25% on Thursday, despite inflation falling to a 17-month low. The Reserve Bank of India may continue to maintain a tight monetary policy for at least the next few months to further curb the country's cost of living crisis.

On the same day, South African policymakers are also expected to maintain interest rates unchanged for the seventh consecutive time to control inflation and limit it to the latest level of 5.2%. South African Reserve Bank Governor Lesetja Kganyago has repeatedly stated that officials will not cut rates until inflation stabilizes at 4.5%. The central bank tends to link expectations with target inflation.

Considering persistent inflation and exchange rate pressures, Angolan policymakers will raise the benchmark interest rate for the third consecutive time on Friday, with the current rate at 19.5%.

Latin America

The four major economies in Latin America will release economic activity data for May, a key indicator for measuring GDP. Central banks are closely monitoring this indicator due to ongoing concerns about economic growth and inflation.

Policymakers in Brazil and Peru recently paused their easing cycles, and both countries will release economic data on Monday. In recent weeks, Brazilian President Luiz Inacio Lula da Silva has once again criticized the high cost of borrowing, believing it poses a threat to the country, while Peru's fastest economic growth in over two years has led the central bank to decide to maintain interest rates unchanged for the second consecutive time Colombia will release economic data on Thursday, with the country's first-quarter economic growth falling below expectations, prompting President Gustavo Petro to call for a faster pace of interest rate cuts, but policymakers did not heed his call at the end of June.

Argentina will follow shortly on Thursday afternoon. As President Javier Milei's harsh spending cuts have dampened consumption and economic activity, the second-largest economy in South America fell into recession earlier this year, with the economy shrinking by 2.6% compared to the fourth quarter of 2023