HomeNewsquawk week ahead: RBA announcement and US retail salesNewsquawk week ahead: RBA announcement and US retail salesNewsAdam Button46 minutes agoNext week's highlights include: BoJ Summary of Opinions (Mon), RBA Announcement (Tue), US CPI (Wed), Norges Bank Announcement (Thu), UK GDP (Thu), US Retail Sales (Fri). This also reviews events from the week just gone.Mon: BoJ Summary of OpinionsTue: RBA AnnouncementWed: German Final Inflation (Jul), IEA OMR, OPEC MOMR, US CPI (Jul)Thu: Norges Bank Announcement, UK GDP (Q2), US PPI (Jul)Fri: EZ Employment (Q2) and GDP 2nd Estimate (Q2), US Retail Sales (Jul), US University of Michigan Prelim (Aug)BoJ Summary of Opinions (Mon):The BoJ will release the Summary of Opinions from its July 31st meeting, where the central bank kept rates unchanged at 1.
00%, as widely expected, after raising rates at its previous meeting in June. The decision was made by an 8-1 vote, with board member Takata dissenting and proposing a 25bps hike. Attention will therefore be on the degree of support for further near-term tightening among other Board members and whether Takata's dissent was an isolated view or if other members also saw a case for raising rates sooner rather than later.
The Summary will also be eyed for views on the inflation outlook and the conditions needed for another rate hike, particularly after the BoJ said it would continue to raise rates in response to economic and price developments and financial conditions, while considering the timing and pace of hikes as it assesses risks to its baseline scenario. Of particular interest will be any discussion around upside inflation risks after Governor Ueda said the next meeting would take into account the risk of inflation overshooting by more than in the past and stressed that the BoJ does not need to wait for data showing inflation has fully stabilised at 2% before making policy decisions. Participants will also look for views on risks stemming from developments in the Middle East and their potential impact on prices and the economy.
As a reminder, the BoJ's updated Outlook Report slightly raised its real GDP forecasts for FY26 and FY27, while lowering its core CPI estimate for FY26 and raising it for FY27, with underlying inflation still expected to reach a level consistent with the 2% target between the second half of FY26 and FY27.RBA Announcement (Tue):The RBA is expected to keep rates unchanged at its meeting next week, with money markets pricing around a 99% probability that the Cash Rate will be maintained at the current level of 4.35%, while the central bank will also release its quarterly Statement on Monetary Policy, including its latest economic projections.
As a reminder, the RBA paused at its last meeting in June, as expected, following three consecutive rate hikes at prior meetings, although the language remained hawkish as it warned of potential further rate hikes if necessary, citing persistent inflation and oil supply disruptions. The RBA also said the latest data indicated that headline and underlying inflation remained too high and that the Board would monitor incoming data and its evolving assessment of the outlook and risks to guide its decisions, while noting that short-term inflation expectations had eased but remained above levels seen earlier this year. Furthermore, it stated that monetary policy was well placed to respond to developments and that the Board was focused on its mandate to deliver price stability and full employment, while it would do what it considered necessary to achieve that outcome, including increasing the Cash Rate target further if required.
RBA Governor Bullock continued to echo the hawkish tone during the press conference, stating that inflation remained too high and that the Board was still concerned about inflation, but was in a better position, while it was too early to say whether the cooling housing market would help with policy. She also revealed that the Board did not consider raising rates at the meeting, but acknowledged that risks remained to the upside and that it could not rule out having to do more on rates. Conversely, the latest key data releases from Australia suggest a lack of urgency for immediate policy adjustments, as inflation cooled in Q2, with headline CPI at 0.
6% Q/Q vs Exp. 0.7% (Prev.
1.4%) and 3.9% Y/Y vs Exp.
4.1% (Prev. 4.
1%). The RBA's preferred Trimmed Mean CPI was also softer than expected at 0.8% Q/Q vs Exp.
0.9% (Prev. 0.
8%) and 3.6% Y/Y vs Exp. 3.
7% (Prev. 3.5%), but remained above the 2-3% medium-term target, suggesting the central bank will likely maintain its hawkish tone at the upcoming meeting.
Recent jobs data have been encouraging, with Employment Change in June topping forecasts at 76.3k vs Exp. 15k (Prev.
40.3k) and the Unemployment Rate steady at 4.4%, suggesting there is room to manoeuvre on policy.
However, an immediate adjustment is unlikely as the Board has noted that it saw merit in using the room created by earlier hikes to assess how the economy was faring and agreed that financial conditions were now likely somewhat tight.US CPI (Wed):The consensus looks for headline CPI to rise by 0.1% M/M in July (prev.
-0.4%), and the core rate to rise by 0.2% M/M (prev.
0.0%). Pantheon Macroeconomics argues that this will be enough to keep the FOMC in wait-and-see mode.
The consultancy says core goods prices are expected to rise by 0.18%, which would be the largest monthly gain since September, driven partly by Apple’s (AAPL) decision to raise prices on most of its hardware by between 15-30% from 25th June. This is expected to be partly offset by declines in services components, with airline fares expected to fall by 1.
5%, accommodation prices to fall by 1%, and auto insurance premiums also expected to continue the recent downside trend. Pantheon looks for CPI energy goods prices falling by 2.6% in July, which it says should trim 11bps from the headline, while food-at-home prices are forecast to rise a modest 0.
2%. the consultancy cautions that the range of plausible outcomes is unusually wide in July, and adds that August’s inflation data is more likely to have a greater bearing on the FOMC’s September decision, where markets currently price a 53% chance of a 25bps rate rise.Norges Bank Announcement (Thu):Policymakers at Norges Bank are expected to leave rates unchanged at 4.
25% at their policy meeting on 13th August. At June's meeting, the statement said that "it will likely be necessary to raise rates further at one of the forthcoming meetings". This was reflected in the policy rate path model in the MPR, which showed the policy rate peaking at 4.
50% by the end of 2026. Nordea argues for a hold in August after June's core inflation came in at 2.7% Y/Y, significantly below Norges Bank's projection of 3.
3%. The Bank will also receive the July inflation report, on the Monday. July's CPI-ATE, the core inflation measure preferred by Norges Bank, is expected to tick up to 2.
8% Y/Y from 2.7%, but remain below Norges Bank's forecast of 3.3% Y/Y.
SEB highlights the decline in food inflation in June, which cooled more than expected for a second consecutive month, potentially indicating that food inflation is finally slowing. Despite the expected uptick in core inflation, Nordea states that this should not have much impact on the Board's decision at Thursday's policy meeting, with inflation below the Bank's forecast. Looking ahead, Nordea expects a rate hike in the autumn as it is not convinced that underlying inflation is as weak as recent reports suggest.
UK GDP (Thu):The June and Q2 read is expected to show growth, but is seen pulling back from prior levels. In May, the series was propped up entirely by the Services sector. For June, the expected loss of momentum was, according to the PMI commentary, driven by "Strong cost pressures, lacklustre demand and business uncertainties arising from the Middle East conflict...
". For Q2, the preliminary Q/Q is seen at 0.4% (prev.
0.6%), give