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October 25, 2021

The Week Ahead: CPI, GDP, PCE & Monetary Policy

Bart Kurek

Let's look at the news event's we've got lining up this week...

(AUD) CPI

The quarterly AUD Consumer Price Index (CPI) report is releasing on Wednesday, which measures the change in the average price basket of goods and services by consumers, which can be anything from food, transportation and medical care. Changes in the CPI are used to assess price changes associated with living in the country. It is one of the most used statistics to identify periods of inflation or deflation.

Analysts expect a pickup in the headline figure by another 0.8% and a 0.5% gain in the trimmed mean CPI for Q3. Better than expected results could spur further gains for the Australian currency, given how the economy is recovering after the pandemic lockdowns, this could also push the RBA into action, potentially considering hiking interest rates to keep price pressures in check.

(CAD) Rate Statement

No changes to the 0.25% interest rate are eyes, but the BoC might have some adjustments to asset purchases. Employment and inflation figures have surpassed expectations in the past couple of months, so the BoC could stay on track towards ending their easing program by the end of the year, meaning a reduction from C$2B to C$1B in weekly asset purchases.

(EUR) Monetary Policy Statement

No changes to interest rates or bond purchases are expected from the ECB, and policymakers might slice hopes of an interest rate hike for next year since stagflation remains a strong threat in the region. Nonetheless, the energy crunch and supply chain issues are also weighing on growth prospects.

(CAD) GDP

A Gross Domestic Product (GDP) report is a measure of the size and health of a country's economy over a period of time. The figure sums up the country's performance in terms of trade, consumer activity, government spending and investment during a particular period.

Analysts are expecting to see a slower 2.6% expansion following an impressive 6.7% growth figure previously. Weaker job growth and rising price levels likely kept consumer spending in check, even as businesses slowly resume normal operations. The Atlanta Fed GDP model is pointing to a meager 0.5% growth figure, so a downside surprise could be likely.

(USD) PCE Price Index

The Core Personal Consumption Expenditures (PCE) Price Index is releasing on Friday and it reflects changes in the prices of goods and services purchased by consumers in the US. Slightly slower price pressures are eyed since the reading could dip from 0.3% to 0.2% in September. This is the Fed's preferred measure of inflation, and hence should be a very big deal!

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