Key events in developed markets

The Federal Reserve policy meeting will dominate the agenda next week with another 25bp rate cut looking probable. The headwinds facing the US economy have been intensifying with trade tensions, a global slowdown and a strong dollar all taking their toll on the US economic outlook. Investment is weakening and the latest jobs report hinted at a deceleration in hiring. For now, the domestically focused, consumer-orientated parts of the economy are holding up, but with inflation looking non-threatening the Federal Reserve has scope to offer support to the economy. After all, Fed Chair Jerome Powell recently commented that while he didn’t expect a recession, there are risks facing the US economy and stated that “we're conducting policy in a way that we'll address them”.

Political uncertainty continues to weigh on UK sentiment and activity and in this environment, the Bank of England appears to be increasingly inclined to offer some support to the economy should fears of a no deal Brexit materialise.

Next week’s inflation numbers are set to show a further moderation in price pressures, suggesting the BoE has room to act, but they are unlikely to waste their ammunition in this current period of limbo now that parliament is suspended.

We expect the Norges Bank to remain on hold at 1.25% during next week’s meeting. It is a close call given the oil investment boom going on, but with central banks all in an easing mode around the world, we see a hike as unlikely.