Week Ahead – Inflation woes continue

How will central banks respond?

Inflation and interest rates have been at the forefront of investors’ minds so far this year and that’s unlikely to change for some time yet. Earnings season provided a welcome and timely distraction and enabled markets to find some stability but as we saw towards the end of last week, inflation continues to dominate.

While many expect inflation to peak over the next couple of months, for various reasons, and then fall quite quickly, there’s not an enormous amount of confidence that everything will go according to plan. And there’s plenty of evidence over the last few months of inflation catching central banks and the rest of us by surprise.

Next week offers plenty of economic data from around the globe and unsurprisingly, it’s the inflation indicators that will attract the most attention. As will the commentary from the various policymakers that are scheduled to speak, with some slowly accepting that a big policy response is necessary and others continuing to push back against market expectations with little success. Whatever happens, it promises to be another fascinating week.

Fed commentary key as markets price in more rate hikes

Can BoE continue to push back against market expectations?

CBRT expected to pause easing cycle as inflation nears 50%


With Wall Street completely fixated on inflation, the upcoming round of economic data should confirm that peak of inflation is nearing and that the US consumer is still strong.  Tuesday’s release of producer price data should show that suppliers are still charging businesses higher prices while the Empire manufacturing survey is expected to return back to positive territory. On Wednesday, retail sales should bounce back as December’s slump was driven by the omicron hit to demand and supply disruptions. Also in the middle of the week, Industrial production is expected to rebound. Thursday is a busy day that includes initial jobless claims, Philly Fed business outlook, housing starts, and building permits.      

Fed speak will include speeches from James Bullard and Loretta Mester on Thursday.  Fed’s Evans and Waller will participate in a panel that discusses the Fed’s new policy strategy.  


A relatively quiet week on the economic side of things, with the bulk of next week’s notable data coming on Tuesday. GDP and employment data for the euro area will be notable but no game-changer, the same can be said for the ZEW surveys although they will contain some hint over how the economy is expected to perform amid higher levels of inflation. Once again, it’s the ECB speak that will be the highlight but we can probably expect more pushback against market expectations ahead of next month’s meeting when we will likely see a significant policy shift.

Olaf Scholz is scheduled to travel to Russia to meet Vladimir Putin on Tuesday in an attempt to ease tensions between NATO and Russia over Ukraine. 


Next week is when we get the UK data dump and, unsurprisingly, all of the focus will be on the CPI data and just how bad the situation has got. We don’t seem to get too many positive surprises at the moment and markets are already pricing in another four or five hikes this year, including another two consecutive increases in March and May. The BoE appears on board with the latter but has indicated market expectations over the year are excessive. Perhaps next week will change their mind.

Boris Johnson continues to hang in there as we await the outcome of the police inquiry into numerous lockdown parties.


The CBR raised interest rates by 100 basis points on Friday to 9.5%, in line with expectations. It did leave the door open to more increases though, despite the belief that inflation will return to target and peak soon.

Next week’s highlight will be the meeting between Putin and Scholz, with PPI data being of some interest.

South Africa

CPI data will be key next week as it currently sits right at the upper end of its target range and the SARB has raised rates at the last two meetings while signalling more could follow.


The first test of the year for the CBRT is next week as it meets to decide whether to keep cutting interest rates or not. Inflation has hit 48.7% if the official data is to be believed after the head of the agency was sacked. We could see a more restrained central bank over the next year as Erdogan will not want to go into an election next year with sky-high inflation, which may explain the relentless cutting exercise last year. Whether or not that gamble pays off is another thing but we should learn more next week.


China releases CPI for January on Wednesday. Inflation is expected to slow to 1.0%, down from 1.5% in December. A decline in food prices likely offsets the rise in energy and gasoline prices.


On Monday, India releases CPI for January. Inflation came in at 5.6% in December and is expected to rise to 6%, which is the upper end of the central bank’s target of 2%-6%. The expected upswing in inflation is a result of higher food and telecom prices as well as supply chain issues.

India, the world’s largest democracy, will hold elections in five states, including Goa and Uttarakhand. Some 180 million people are eligible to vote, and the results could determine the political future of Prime Minister Narendra Modi and his Bharatiya Janata Party (BJP). 


Australia releases the January employment report on Thursday. Job growth sparkled in December (64,800), but is expected to have ground to a halt in January, with a consensus of a negligible 2,500 new jobs. This is a result of the Omicron outbreak in January, which significantly dampened job growth. 

The unemployment rate is projected to have inched lower to 4.1%, down from 4.2% in December.

New Zealand

Mostly tier two and three data being released over the course of the next week.


Japan releases fourth-quarter GDP on Tuesday. The economy is expected to have rebounded in Q4 as the government lifted health restrictions due to the Omicron wave at the end of September. The consensus for GDP Q4 stands at 6.0% y/y, after a contraction of 3.6% in Q3.  

On Friday, Japan releases National CPI for January. Core CPI is expected to have posted a small gain of 0.3%, down from 0.5% in December. The drop in inflation can be attributed to the renewal of health restrictions across most of Japan, which put a dent in consumer spending.

Economic Calendar

Saturday, Feb. 12

US Secretary of State Blinken speaks to Japanese and South Korean officials about North Korea’s nuclear and missile programs

ASSIOM FOREX annual congress of financial market operators continues, with a speech by Bank of Italy Governor Visco

Sunday, Feb. 13

Informal meeting of EU trade ministers in Marseille, France

Monday, Feb. 14

Economic Data/Events

ECB President Lagarde participates in European Parliament debate on ECB’s 2020 Annual Report

Assembly elections for India’s Uttarakhand, Goa to take place

Germany’s Scholz travels to Ukraine for talks with President Zelensky

Informal meeting of EU ministers in Bordeaux, France

Czech CPI

India CPI

India wholesale prices

New Zealand food prices

Tuesday, Feb. 15

Economic Data/Events

Australia RBA Minutes

US cross-border investment, PPI, empire manufacturing

Germany’s Scholz travels to Moscow for talks with President Putin.

Germany ZEW survey expectations

Eurozone GDP

Japan GDP

Hungary GDP

Poland GDP, CPI

India Trade

Norway Trade

Canada housing starts, existing home sales

Japan industrial production

Mexico international reserves

New Zealand home sales

Philippines overseas remittances

UK jobless claims, unemployment

Turkey central government budget balance

Denmark PPI, GDP indicator

Norway consumer confidence

Wednesday, Feb. 16

NATO defense ministers meet in Brussels. Through Feb. 17

North Korea celebrates its Day of the Shining Star holiday to mark what would have been the 80th birthday of former leader Kim Jong Il, with satellite imagery pointing to a possible military parade to mark the occasion.

Economic Data/Events

Fed Minutes

US Retail Sales, business inventories, industrial production

Canada CPI

South Africa CPI

Russia CPI

Norway GDP

South Africa Retail Sales

China CPI, PPI

Eurozone industrial production

Japan tertiary index

UK House prices, PPI, CPI

EIA Crude Oil Inventory Report

Thursday, Feb. 17

G20 finance ministers and central bank governors meet

Fed’s Mester speaks at an event at the NYU Stern School of Business

Fed’s Bullard speaks at SGH Macro Advisors and Columbia University fireside chat

EU-African Union Summit in Brussels

ECB publishes its economic bulletin

ECB Chief Economist Philip Lane joins an MNI webcast

Norway’s Norges Bank governor’s annual address

Economic Data/Events

US housing starts, initial jobless claims

G20 finance ministers and central bank governors meet

Fed’s Mester speaks at an event of the NYU Stern School of Business

Fed’s Bullard speaks at SGH Macro Advisors and Columbia University fireside chat

EU-African Union Summit in Brussels

ECB publishes its economic bulletin

ECB Chief Economist Lane joins an MNI webcast

Norway’s Norges Bank governor’s annual address

Italy Trade

Japan Trade

Singapore Trade

Turkey Rate decision

Australia unemployment

Eurozone new car registrations

Singapore GDP

Russia gold and forex reserves

Friday, Feb. 18

Economic Data/Events

ECB’s Panetta and the Fed’s Evans; Waller and Brainard to speak at the US Monetary Policy Forum.

US existing home sales, US Conference Board leading index

UK retail sales

Japan CPI

France CPI

Sweden CPI 

Russia GDP, money supply

Canada retail sales

Eurozone consumer confidence

Turkey consumer confidence

France unemployment

Turkey home sales

Sovereign Rating Updates

Denmark (Fitch)

France (Fitch)

Poland (Fitch)

France (S&P)

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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