Week Ahead – The great inflation debate

Central banks have a massive dilemma on their hands

There’s a clear and unintentional theme to this week’s preview, something that’s increasingly come to dominate the conversation, drive markets around the globe and across asset class, and that we haven’t had to think about or deal with for a long time; inflation.

Central banks have backed themselves into a corner and for different reasons. Whether that’s through sticking to the “inflation is transitory” line for too long, promising rate hikes and not delivering or cutting rates while inflation is rising at an extraordinary rate. Credibility is the lowest it’s been in years.

The last week was dominated by the US inflation story as CPI hit a 31-year high. This week will be more broad-based, as more countries release inflation data or hold central bank meetings. The US may be front and centre for obvious reasons, but inflation is a global problem and that’s becoming increasingly clear.

Is the Fed making a policy mistake?

Will CPI data ease pressure on BoE?

CBRT to continue easing despite soaring inflation


The focus on Wall Street is all about inflation and whether the Fed is making a policy mistake.  The latest retail sales report will show us how strong the US consumer is despite the recent broad-based pricing pressures.  The October retail sales report is expected to show a resilient consumer is beginning holiday shopping.  Sales at retail stores, restaurants, and online sellers are expected to increase by 1.1%, an improvement over the 0.7% seen in September.  

Given Wall Street’s new stance over pricing pressures, investors will closely listen to a wrath of Fed speakers to find out if some policymakers are abandoning the “inflation is transitory” stance.  On Tuesday, Fed’s Barkin and Daly speak.  Wednesday will have speeches from Fed’s Bowman, Mester, Daly, Waller, Evans, and Bostic.  On Thursday, Fed’s Bostic, Daly, and Waller Speak.  Friday contains appearances by Fed’s Waller and Clarida.       


Perhaps not the most eventful week ahead, in theory, but as we’ve seen in recent days in the US, these are very sensitive times. The primary takeaway from the ECB meeting a couple of weeks ago was that the markets weren’t buying what Lagarde was selling. Her dovish message fell on deaf ears.

The final CPI number shouldn’t see much of an upward revision if any, but if it does, it will only add to the inflation narrative which could further spook investors.


If there’s one major central bank that’s hoping to catch a break on inflation, the Bank of England is surely it. It’s backed itself into a corner in recent weeks, warning of an impending hike, before bottling the decision last Thursday. Either an increase is nailed on for December or policymakers will be begging for reprieve when the inflation data is released next week. 

Retail sales and labour market figures will also add some context, especially as they’ll account for the end of the furlough scheme at the end of September which the central bank was apparently keenly waiting for. 


Next week has little on offer from Russia, with PPI data the only release of note.

This week, it was announced that the country will have a prototype of the digital rouble platform early next year and tests will be run before any decision is made. Not market moving at the moment but a potentially important step as central banks further explore the cryptocurrency space.

South Africa

The SARB will make its interest rate announcement on Thursday. The central bank could raise rates but market expectations are pointing to no change this month. Rates will rise over the next couple of years though, with the neutral rate well above the current level. A 25 basis point hike wouldn’t be a total shock.


Inflation is close to 20%, USDTRY is within a whisker of 10 for the first time ever and the CBRT is likely to cut interest rates by another 100 basis points next week. Unconventional to put it mildly but with the central bank’s credibility in tatters, there’s little reason to expect its approach to suddenly change now. The situation has deteriorated greatly and the worst is probably yet to come.


The week kicks off with a selection of Chinese data releases including retail sales, industrial production and fixed-asset investment. The readings are expected to show some stabilisation after falling sharply over the course of this year. Power outages, Covid outbreaks, property woes, crackdowns and more have dragged on activity this year and while stabilisation is encouraging, many challenges still lie ahead.

Evergrande avoided default by the skin of its teeth again this week which keeps the party going a little longer. Other developers have been dragged into the firing line in recent weeks, including Kaisa Group which also has offshore payments due in the short-term, and may not have the same luck. It’s still not clear how this mess will be cleared up and how bad it will get for the sector or the broader credit markets. But every last minute payment buys time which investors are hoping leads to a relatively pain-free resolution.


A very light data week for India, with WPI inflation on Monday the only standout release. Stagflation is a word repeatedly thrown out when discussing India’s outlook at the moment and Monday’s data could further fuel it.


RBA minutes and a speech from Governor Lowe will be front and centre for Australia next week as investors try to make sense of the inflation situation and what central banks are actually going to do. The RBA isn’t alone in this but it certainly contributed to it when it abandoned its yield targeting days before its last meeting. With markets seemingly going it alone on rate expectations when it comes to some central banks, it’s critical that policymakers rebuild bridges and regain trust quickly.

New Zealand

For New Zealand, inflation expectations looks like the standout release on Thursday, although the house price index on Wednesday may also attract some interest. 


A plethora of economic data coming out of Japan next week and it’s hard to know where to start. The economy is likely to have contracted in the third quarter due to the state of emergency but it should rebound in the current quarter as Covid measures were lifted. Fiscal stimulus is also on the way which should help the economy bounce back.

Japan is one country where inflation metrics are not making for ugly reading. Yes, low to no inflation is far from ideal. But at least it’s not putting the BoJ under enormous pressure to raise rates when the economy isn’t ready for it. Other releases this week include industrial production and capacity utilization on Monday, and trade balance and machine orders on Tuesday.

Key Economic Events

Saturday, Nov. 13

COP26 ends

Economic Data/Events

China medium-term lending

Sunday, Nov. 14

Hungary PM Orban holds its annual congress

Monday, Nov. 15

Energy ministers, policymakers and leading industry executives attend the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC)

US Secretary of Commerce Raimondo makes her first official visit to Asia, where she will meet with government officials and business leaders in Japan, Singapore and Malaysia.  

India will allow foreign visitors into the country for the first time in 18 months due to the pandemic.

US Trade Representative Tai travels to Asia for meetings with officials in Tokyo, Seoul and New Delhi.

In a joint EU session, foreign affairs and defence ministers review the first draft of the bloc’s Strategic Compass.

UK PM Johnson delivers the annual Lord Mayor’s Banquet speech.

BOE Haskel speaks at the Resolution Foundation.

Economic Data/Events

US Nov Empire Manufacturing: 20.1 v 19.8 prior

Japan GDP

Thailand GDP

Poland CPI

Canada existing home sales

China property prices, retail sales, industrial production, surveyed jobless

New Zealand performance services index, net migration

Indonesia trade

India trade, wholesale prices

Turkey home sales, budget balance

Japan industrial production, tertiary index, capacity utilization

UK Rightmove house prices, Bloomberg economic survey

Tuesday, Nov. 16

Fed Presidents Barkin, George and Bostic take part in a discussion about racism and the economy with a focus on financial services, hosted by the Minneapolis Fed.

Fed’s Harker speaks at Philadelphia Fed Annual Fintech Conference

Reserve Bank of Australia Governor Lowe speaks to the Australian Business Economists Webinar.

Economic Data/Events

US business inventories, cross-border investment, retail sales, industrial production

Eurozone GDP

Hungary GDP

Poland CPI

Canada housing starts

Australia ANZ Roy Morgan consumer confidence, RBA minutes of policy meeting

Hong Kong jobless rate

Japan tertiary industry index

UK jobless claims, unemployment

Turkey house price index

Wednesday, Nov. 17

SEC Chair Gensler and the presidents of the Fed in New York and San Francisco speak at the US Treasury Market Annual Conference.

European Central Bank Financial Stability Review.

Bank of Russia Governor Nabiullina speaks at an industry forum.

UK PM Johnson speaks to the Liaison Committee

Economic Data/Events

US housing starts

Eurozone CPI


Canada CPI

South Africa CPI

Russia GDP, CPI

Italy trade

Japan machinery orders, trade

New Zealand PPI

Australia Westpac leading index, wage price index, Bloomberg economic survey

Singapore electronic exports, non-oil domestic exports

Mexico international reserves

South Africa retail sales

EIA Crude Oil Inventory Report

Thursday, Nov. 18

IMF Managing Director Georgieva speaks at the fund’s Statistical Forum – ‘Measuring Climate Change: The Economic and Financial Dimensions’.

Economic Data/Events

US Conference Board leading index, initial jobless claims

Singapore GDP

South Africa (SARB) Rate decision: Expected to keep Interest Rate at 3.50%

Turkey (CBRT) Rate decision: Expected to cut One-Week Repo Rate 100 bps to 15.00%

Eurozone new car registrations

Australia RBA FX transactions

China Swift global payments CNY

New Zealand two-year inflation expectations

Thailand car sales

South Korea short-term external debt

Russia gold and forex reserves

Friday, Nov. 19

BOE Chief Economist Huw Pill speaks in Bristol.

Fed’s Richard Clarida and Mary Daly speak at Asia Economic Policy Conference.

EU Justice Commissioner Didier Reynders visits Warsaw amid the escalating judicial row between Poland and the bloc.

Economic Data/Events

Norway GDP

Japan CPI

Canada retail sales

France unemployment

UK GfK consumer confidence, retail sales, public sector net borrowing

New Zealand credit-card spending

Thailand foreign reserves, forward contracts

China FX net settlement

Sovereign Rating Updates:

Switzerland (Fitch)

South Africa (S&P)

Greece (Moody’s)

South Africa (Moody’s)

Denmark (DBRS)

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Former Craig

Former Craig

Former 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.