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Inflation Trends, Interest Rate Decisions, and Labor Market Data: Key Events Shaping the Global Economy This Week

  • Feb 3
  • 3 min read

The upcoming week is packed with key economic releases and central bank decisions that will influence global markets. Investors will closely monitor eurozone inflation, the Bank of England (BoE) monetary policy decision, and labor market data from the U.S. and Canada. These events will provide insights into economic trends and potential policy shifts.


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Key Economic Events and Data Releases

  • Monday: The eurozone will release its latest inflation data, while the ISM Manufacturing PMI from the U.S. will provide insights into the industrial sector’s performance.

  • Tuesday: The U.S. JOLTS job openings data will be published, alongside New Zealand’s employment change and unemployment rate.

  • Wednesday: The U.S. ADP Non-Farm Employment Change and ISM Services PMI will be released, reflecting labor market conditions and economic activity in the services sector.

  • Thursday: The Bank of England (BoE) will announce its latest monetary policy decision, potentially setting the tone for future interest rate moves.

  • Friday: Canada will publish employment change data and the unemployment rate, while the U.S. will release non-farm employment change, average hourly earnings, and consumer sentiment data.


Additionally, several Federal Open Market Committee (FOMC) members are scheduled to speak throughout the week, offering further clues about future U.S. monetary policy.


Inflation and Interest Rate Expectations

Eurozone Inflation


Inflation data from the eurozone will be closely analyzed to determine if the disinflationary trend persists. Consensus forecasts headline inflation at 2.4% year-over-year, with core inflation declining to 2.6%. If the figures come in softer than expected, the European Central Bank (ECB) could move forward with a 25-basis-point (bps) rate cut in March.


Bank of England Policy Outlook

The BoE is expected to cut interest rates by 25 bps to 4.50%, reflecting recent economic weakness. Declining retail sales and slowing services inflation support this expectation. However, the central bank is likely to signal a gradual pace of easing, with one rate cut per quarter. If inflation forecasts drop below 2% in the medium term, markets may anticipate a more aggressive easing cycle in 2025.


U.S. Economic Data and Federal Reserve Outlook

The U.S. ISM Manufacturing PMI is expected to remain in contractionary territory at 49.3, though some indicators suggest improving demand and production. The ISM Services PMI is forecast to rise slightly to 54.2, indicating continued expansion.


Labor market data will be another focal point. The non-farm employment change is expected to slow to 154K, down from 256K, while the unemployment rate is expected to hold steady at 4.1%. Wage growth remains stable, with average hourly earnings projected to rise 0.3% month-over-month. Analysts note that while hiring has softened, the labor market remains resilient, reducing immediate pressure on the Federal Reserve (Fed) to cut rates.


With the Fed holding rates steady amid persistent inflation, any increase in price pressures due to tariffs could complicate future rate decisions.


Global Labor Market Trends


New Zealand

Employment data from New Zealand is expected to reflect continued softening. The unemployment rate is projected to rise from 4.8% to 5.1%, while quarterly employment change is forecast at -0.2%. Despite labor market weakness, the Reserve Bank of New Zealand (RBNZ) is still expected to cut rates by 50 bps in February, given that inflation trends remain within its forecast range.


Canada

Canada’s labor market also shows signs of softening. The unemployment rate is expected to increase from 6.7% to 6.8%, with job creation slowing to 26.5K from 90.9K in the previous month. Analysts highlight a weaker hiring outlook and slowing wage growth, reflecting cooling labor demand.


This week’s market events will provide critical insights into inflation trends, labor market conditions, and central bank policy directions. While the eurozone’s inflation trajectory will determine the ECB’s next steps, the BoE and RBNZ are expected to implement rate cuts. Meanwhile, the U.S. labor market remains stable, supporting the Fed’s cautious stance. Investors will be closely watching for any shifts in policy rhetoric, particularly in light of global economic uncertainties and evolving trade conditions.

 
 
 

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