The coming week is expected to feature another Federal Reserve interest rate hike on Wednesday and the European Central Bank on Thursday, with the Bank of Japan on Friday.
Last month, after making 10 consecutive interest rate hikes over the previous 15 months, the Federal Open Market Committee (FOMC) left rates unchanged at 5-5.25%.
For the coming week's meeting, Fed funds futures contracts are pricing an increase of 24 basis points (bps), with economists nearly universally expecting a 25bps hike.
On Thursday, the ECB is also almost certain to hike by 25bps, with Christine Lagarde likely to emphasise that policy will remain tight for a prolonged period of time.
Fed thoughts
The June meeting was a unanimous decision but, points out economist James Knightley at ING, "there was hawkish messaging in the accompanying press conference and updated Fed forecasts, signalling a broad consensus behind the idea of two more rate rises later in the year".
Fed chair Jerome Powell stressed that varied lags in monetary policy meant that the decision should be interpreted as a slowing in the pace of rate hikes rather than an actual pause.
"While inflation is moderating, it is still far too high and with the jobs market remaining very tight, the Fed can’t take any chances," Knightley says.
US consumer price inflation fell to 3.0% in June from 4.0% in May, while core inflation decreased to 4.8% from 5.3%.
The commentary from Fed speakers since then remains consistent with this messaging, with broad support for another 25bps rate rise at next week's meeting, taking the Fed funds range to 5.25-5.5%.
For ING there is a "70% probability" on the 25bps hike scenario together with commentary from Powell and co emphasising the need to be attentive to inflation risks, that growth needs to slow below trend, and that further rate hikes “may be appropriate”.
"We would then say there is a 25% chance of a more dovish 25bp hike, signalling a likely peak for rates, while the 0bp and 50bp outcomes each have a 2.5% chance of materialising."
Rabobank was another bank expecting the Fed to hike 25bps.
"Despite recent declines, we expect a rebound in headline CPI inflation due to base effects in coming months," said Philip Marey, senior US strategist at Rabobank. "In contrast, we expect a gradual decline in core inflation, but it is likely to remain elevated for the remainder of the year."
"Therefore we stick to our view that the Fed is not going to pivot, i.e. cut rates, this year.
"We also think it is premature to declare a soft landing and we still see the US economy deteriorate in the second half of the year.
"Consequently, we continue to have our doubts about a second rate hike after July, as long as Powell clings to a more moderate pace of the hiking cycle."
How much higher for ECB and will BoJ move?
The ECB is widely expected to hike its deposit rate from 3.5% to 3.75% at its 27 July meeting.
"A further hike to 4.00% in September cannot be ruled out," said Deutsche Bank.
"Either way, the ECB does not want September to be seen as a turning point in the monetary policy cycle. The ECB wants the market to understand its commitment to the timely return of inflation to target and its willingness to go 'higher and longer' if necessary."
As for the BoJ, reports emerged that the policymakers are not likely to introduce any changes to their yield curve control settings next week, with Reuters citing several sources familiar with the central bank’s thinking.
The reports suggest many BoJ policymakers see no imminent need to phase out the bank’s stimulus measures.
Other macro news
Other US macroeconomic news in the calendar includes house prices and consumer confidence on Tuesday, plus mortgage applications and new home sales numbers on Wednesday before the FOMC meeting.
There's durable goods on Thursday and a big US data dump on Friday, including personal consumption expenditures, income and spending figures.
Key UK data includes flash PMI survey numbers on Monday for the manufacturing and services sectors, along with an economic forecast for the rest of 2023 and for 2024 from the EY ITEM Club.
On Tuesday, there's the CBI industrial trends and business optimism index, with Friday bringing the CBI retail survey and SMMT car production report.
Australian inflation is on Wednesday