Fed and BOE Prepare 75 Basis-Point attack on Inflation

RBA, FOMC, BOE Meetings Featured while the Greenback's Recovery maybe Extended?

Last week, interest rate hikes were delivered by the Bank of Canada and the ECB. The BOJ left rates unchanged.

Canada surprising many with a smaller hike than predicted.

The week ahead is important from a macro perspective. The data highlights include China's PMI, eurozone preliminary October CPI and Q3 GDP, and the US (and Canadian) employment reports. In addition, the Federal Reserve meeting on November 2 is sandwiched between the Reserve Bank of Australia meeting and the Bank of England meeting.

The Federal Reserve and the Bank of England may both unleash 75 basis-point interest-rate hikes in the coming days in a show of aggression toward inflation, even in the face of mounting recession risks.

The transatlantic double act illustrates the trade-off confronting central banks as evidence of an impending global economic contraction becomes harder to ignore, even as inflation lingers.

For each central bank, the week’s action is likely to be only a stepping stone toward even higher borrowing costs. Economists surveyed by Bloomberg reckon Fed rates will reach 5% by March, while the BOE may keep raising to settle above 4%.

Central Banks this week

The RBA is expected to hike rates on Tuesday by 25bps, to bring the key rate to 2.85%. At its previous meeting on October 4th, the central bank surprised markets by only raising rates by 25bps vs an expectation of a 50bps hike. However, it noted that inflation is too high and further rate hikes are expected. On October 25th, Australia released its Q3 CPI. The print was higher than expected at 7.3% vs and expectation of 7% and a Q3 reading of 6.1%. Given the larger than expected jump in inflation, is it possible the RBA could surprise again, however this time with a rise of 50bps? Also watch the guidance. At the last meeting, the central bank said it expected inflation to be near 7.75% for 2022. Look for any wording that may suggest this rate will be higher, which may cause the terminal rate to increase for Australia.

The FOMC will meet on Wednesday this week and is widely expected to hike rates by 75bps to bring the Fed Funds are to 4.00%. The WSJ’s Fed whisperer, Nick Timiraos, did his best to confirm this on Friday by tweeting that “the Fed isn’t data-point dependent and the decision for next week of 75bps seems unlikely to change…”. CPI for September was still high at 8.2% (slightly lower than August), however the Core-CPI print was 6.6%, up form 6.3% in August. Jobs data has remained strong through September and October’s NFP data, which will be released Friday, is expected to remain firm with 220,000 new jobs added to the economy.

Finally, the Bank of England will meet to discuss interest rate policy on Thursday. Since the last meeting, interest rate expectations have been all over the place as former PM Truss disappointed markets with her “mini-budget” plan. At one point, expectation was for an increase as high as 150bps! However, more recently, Liz Truss has resigned, and Rishi Sunak is now the PM. Markets have settled down, with bond yields and fx rates returned to near the pre-Truss era. Expectations are pricing in a 75bps rate hike for this week’s meeting, which will bring the key interest rate to 3%. Note that CPI for September was 10.1% YoY vs 9.9% YoY previously.


Earnings were the talk of Wall Street last week as some of the biggest names in tech missed on earnings. First up was GOOG, which showed an EPS of 1.06 vs an expectation of 1.25. Revenues were also lower than expected. Next was META, which posted a gain of 1.64 vs an expectation of 1.88. The company said that it faces near-term challenges on revenue and sees its reality labs operating losses in 2023 significantly higher. Although AMZN beat on EPS, it guided its Q4 sales lower to $140B-$148B vs an estimate of $155B. This week will bring more earnings from large companies in all different sectors. For a complete look at this week’s earnings, see my colleague Josh Warner’s complete preview here. Some of the more important companies to report this week are as follows: AIG, Airbnb, AMD, BP, Pfizer, Uber, Aston Martin, GSK, Marathon Oil, Robinhood, Amgen, Coinbase, Conoco Philips, DBS Group, DoorDash, Moderna, PayPal, Sainsbury’s Starbucks and Woolworths.

Economic Data

The week kicks off with PMI data from China, where data has been weak lately. In addition, markets will get their first look at October CPI from the EU. Expectations are for 9.8% YoY vs a previous reading of 9.9% YoY last. Markets will also see employment data from New Zealand, Germany, Canada, and the US, with the most market moving potential from the US Non-Farm Payrolls. Expectations are for the US to have added 220,000 jobs to the economy in October and for the unemployment rate to have ticked up to 3.6% from 3.5%. Other important economic data due out this week is as follows:


Japan: Industrial Production Prel (SEP)

Japan: Retail Sales (SEP)

Australia: Retail Sales (SEP)

China: NBS Manufacturing PMI (OCT)

China: NBS Non-Manufacturing PMI (OCT)

China: NBS General PMI (OCT)

Japan: Consumer Confidence (OCT)

Japan: Housing Starts (SEP)

Germany: Retail Sales (SEP)

EU: GDP Growth Rate Flash (Q3)

EU: CPI Flash (OCT)

US: Chicago PMI (OCT)

US: Dallas Fed Manufacturing Index (OCT)


Global (ex-Europe): Manufacturing PMIs Final (OCT)

New Zealand: Building Permits (SEP)

China: Caixin Manufacturing PMI (OCT)

Australia: RBA Interest Rate Decision

US: ISM Manufacturing PMI (OCT)


Europe: Manufacturing PMIs Final (OCT)

New Zealand: RBNZ Financial Stability Report

New Zealand: Unemployment Rate (Q3)

New Zealand: Employment Change (Q3)

Japan: BOJ Monetary Policy Meeting Minutes

Australia: Building Permits Prel (SEP)

Australia: RBA Chart Pack

Germany: Trade Balance (SEP)

Germany: Unemployment Change (OCT)

US: ADP Employment Change (OCT)

US: Fed Interest Rate Decision

Crude Inventories


Global (ex-Europe): Services PMI Finals (OCT)

Australia: Trade Balance (SEP)

China: Caixin Services PMI (OCT)

Euro Area: Unemployment Rate (SEP)

UK: BOE Interest Rate Decision

Canada: Trade Balance (SEP)

US: Trade Balance (SEP)

US: Unit Labour Costs Prel (Q3)

US: ISM Non-Manufacturing PMI (OCT)


Europe: Services PMI Finals (OCT)

Australia: RBA Statement on Monetary Policy

Australia: Retail Sales Final (SEP)

Germany: Factory Orders (SEP)


Canada: Employment Change (OCT)

US: Non-Farm Payrolls (OCT)

Canada: Ivey PMI s.a. (OCT)

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