A slew of macroeconomic news from the US is set to dominate next week as the Federal Reserve’s latest rate call is followed by gross domestic product and inflation data.
Having signalled expectations for just two rate cuts in 2025 upon cutting its key rate to a range of 4.25% to 4.50% last month, expectations are for the Fed to hold this time around.
Wednesday’s decision should firm up such expectations, IG analysts noted, given a lack of surprises in data signalling subsiding inflation but economic strength since.
“Whether President Trump starts to pressure [Fed chair] Powell for cheaper money” as promised “is just one further variable,” AJ Bell analyst Russ Mould added.
Further clarity will come on Thursday though, with the release of advanced fourth-quarter GDP figures, which markets anticipate will show moderating growth.
Consensus is for the US economy to have expanded by 2.7%, against 3.1% in the third quarter, according to Trading Economics.
Core personal consumption expenditure figures on Friday then cap off a busy week in the US, with analysts looking for the Fed’s preferred measure of inflation to have climbed by 0.2% in December.
Back across the Atlantic, the European Central Bank’s rate call on Thursday is expected to see a cut, while Bank of England consumer credit data will also be in focus.
Encompassing mortgage approvals, the data is expected to show higher consumer credit at £1.3 billion in December but a drop in new loans for houses to 61,500.