Jay Powell’s big week

Hello and welcome to the working week.

The week ahead is a significant one for central banks on both sides of the pond, with the Federal Reserve and the Bank of England each set to announce interest rate decisions. First up on Wednesday is the Fed, where it would seem the question is no longer if there will be a rate cut, but rather by how much.

While markets on Friday ascribed a 57 per cent probability to a quarter-point cut, investors had sharply increased their bets on a half-percentage-point interest rate, as the US central bank makes moves to lower borrowing costs for the first time in more than four years.

Data released last Tuesday showed that US inflation fell to 2.5 per cent in August. “Disinflation is an imperfect journey but it’s certainly happening,” Kristina Hooper, chief global market strategist at Invesco, told the FT last week.

In the UK, my colleague Valentina Romei reported that public confidence in the BoE’s strategy to handle inflation took a positive turn in August, for the first time in more than two years, according to official data ahead of the bank’s rate decision that will take place on Thursday.

Markets largely expect the BoE to keep UK rates on hold, but underwhelming figures from last Tuesday’s GDP report for July have slightly increased the odds of a rate cut. Earlier this month, Michael Saunders, senior economic adviser at Oxford Economics and a former external member of the BoE’s Monetary Policy Committee, theorised that the UK’s rate-cutting cycle could be quicker than expected. He concluded that “market pricing currently implies that Bank Rate will fall to about 3.75% at end-2025 and stay around 3.5% thereafter”.

In companies news, we can expect half-year results from B&Q and Screwfix owner Kingfisher, Q3 results from online grocery retailer Ocado and half-year results from clothing retailer Next.

One more thing . . . 

Tech lovers who are unable to release themselves from the ever-tight shackles of Apple products should brace themselves for the range of new devices that will hit stores on Friday, including the iPhone 16, Apple Watch Series 10 and AirPods 4. The company came under fire earlier this year for its alleged use of illegally exported minerals from the war-torn east of the Democratic Republic of Congo. At the time, Apple’s disclosures said the company had “no reasonable basis for concluding” that any of its tin, tungsten and tantalum smelters or refiners “directly or indirectly financed” armed groups in the DRC or adjoining countries.

Apple has been expanding its use of recycled materials in its products to reduce its consumption of such metals and minerals, which we hope has been reflected in the release of its “most innovative line-up yet”.

Key economic and company reports

Here is a more complete list of what to expect in terms of company reports and economic data this week.

Monday

Tuesday

Wednesday

Thursday

• UK: BoE rate decision

• US: Initial jobless claims

• Business insights and impact on the UK economy statistics

• UK: Annual savings statistics

• Results: Next HY, FedEx Q1

Friday

• UK: Public sector finances

• UK: Monthly retail sales figures

• Japan: Monetary policy meeting decision

• US Labor Department, Bureau of Labor Statistics: State Employment and Unemployment, monthly report (Aug 2024)

World events

Finally, here is a rundown of other events and milestones this week.

Monday

Tuesday

• Financial Times and Schroders Business Book of the year shortlist announced Catch up on the longlist here.

• Italy: Milan Fashion Week starts

• UK: Inaugural Sky Arts Awards

Wednesday

Thursday

• UK: BMW PGA Championship gets under way

• UN Security Council discusses Israeli settlements

• St Kitts and Nevis: Independence Day

Friday

• US: First states begin early in-person voting in presidential election

• UK: Reform leader Nigel Farage speaks at his party’s national conference

• Brazil: G20 tourism ministers meeting

Saturday

• Sri Lanka: presidential election where recent polls have projected a strong showing for People’s Liberation Front leader Anura Kumara Dissanayake.

• US: Republican VP nominee JD Vance speaks at Tucker Carlson Live Tour stop in Pennsylvania

• World Alzheimer’s Day

Sunday

• UK: Labour party conference commences

• UN Summit of the Future starts

• Singapore: F1 Grand Prix

• US: NYC Climate Week begins