Week Ahead: Nine Major Rate Decisions with developed markets moving slow

A huge week of central bank rate decisions will tell a diverging story over how developed markets can afford to hold off on rate hiking cycles while emerging markets continue to tighten monetary policy.  The main event on Wall Street will be the FOMC policy decision that was made easier after the latest inflation report that showed consumer prices rose to the fastest annual pace in nearly 40 years.  The Fed’s hawkish shift is completely justified and a faster pace of tapering its asset purchases is not only warranted its long overdue.

Nine major central bank decisions will show policymakers are changing course with monetary policy.  The ECB may exit its pandemic emergency program while boosting its regular asset purchase program.  The BOE will need to raise rates soon but they may hold off until the New Year.

FOMC to deliver a faster taper

ECB debates stimulus exit

BOE to hold off on raising rates



Now that the latest inflation report showed inflation remains stubbornly high, the focus shifts completely on the FOMC policy decision. The Fed is expected to recognize inflation has been persistent and announce a faster taper. The hawkish shift will be complete after policymakers bump up their median projection for the central bank’s short-term target rate. Expectations are growing that the Fed will double the pace of its bond purchase taper, but if they only deliver a modest increase, the Fed’s credibility will take a hit. 

On Tuesday, the Empire Manufacturing report is expected to show activity cooled in December, while prices paid to US producers could soften from elevated levels.  Wednesday is a busy day with retail sales expected to show inflation is impacting consumer spending, followed by Fed tapering fireworks in the afternoon. Thursday is all about housing data that should show housing starts and building permits continue to rise. The last trading day of the week will give an early glimpse on December manufacturing and service PMI data.   


The first half of next week is looking a little quiet but the last couple of days is action-packed, with the ECB monetary policy meeting undoubtedly the headline event. Central banks are really under the spotlight at the moment as inflation rises well above target and shows no sign of abating. The ECB is among those that has legitimate reason to believe it will return below target over the medium term and with the PEPP program expiring in March, there is a question of what will replace it, if anything. This question could be answered next week.

PMI and inflation data will also be released on Thursday and Friday which should make for a blockbuster week ahead of the holiday season.


A big week for the UK as we get a raft of economic data including the jobs report, inflation, PMIs and retail sales. But it’s the BoE decision on Thursday that will draw the most attention, with the MPC now expected to hold off on raising rates due to the uncertainty around Omicron. It’s not certain that this will happen, with markets still pricing in around a decent chance of a 15 basis point increase but it’s no longer the most likely outcome. 


The CBR is expected to increase interest rates by 100 basis points on Friday as it continues to push back against rising inflationary pressures. It rose to 8.4% last month, well above its 4% target. 

It last raised rates by 75 basis points in October when it said further hikes could be warranted at upcoming meetings if the situation develops in line with baseline forecasts, which had inflation between 7.4% and 7.9% at the end of 2021. 

South Africa

The country is continuing to deal with the Omicron outbreak that’s seeing cases surge rapidly, perhaps even 4.2 times faster than delta. With hospitals not yet overwhelmed and symptoms reportedly milder than delta, the government may resist implementing harsh restrictions too soon. Of course, the situation is developing rapidly and as more data is collected, that could change fast.

CPI inflation is the only data release next week.


The CBRT meets next week and as always, anything can happen. The central bank has cut interest rates by 400 basis points since September and signaled it could again in December, before assessing its position. This is despite inflation continuing to rise and hitting 21.31% in November.

The central bank is clearly under pressure from President Erdogan – a strong opponent of high interest rates and staunch believer that higher rates stoke inflation – and he has repeatedly defended the CBRTs moves in recent weeks. 

Interventions in the currency markets haven’t been particularly beneficial and more unconventional policies like this will be needed if the central bank continues on this dangerous path. 


Fitch has placed Evergrande and Kaisa in selective default. Restructuring headlines over the weekend will dominate early Monday sentiment. China has responded by cutting the RRR last week and this week, has hiked the foreign reserve requirements of China Banks and has fixed the Yuan sharply lower versus the US Dollar. In totality it suggests that China is nervous about the fallout on the economy of the failure of indebted property developments and has finished with the trend of Yuan strength. Whether the US agrees or not is open to debate.

China releases heavyweight data in the coming week. Wednesday has Industrial Production, Retail Sales, UNemployment and Fixed Asset Investment. Coming before the FOMC decision, the data, if weaker, will weigh heavily on China equities and possibly the Yuan. Not quite the outcomes the government and PBOC want to achieve.

Otherwise, keep an eye on the news ticker for Evergrande developments and further technology company restrictions re overseas listings.


The Reserve Bank of India held policy rates and outlook unchanged this week, remaining in dovish mode to support the post-delta recovery at the expense of surging inflation. Local equites and the INR have held steady as the US Dollar weakened.

India releases trade data this week but equities and the currency will be completely at the mercy of the FOMC outcome on Thursday Asian time. Both have been buoyed in recent months by hot money flowing from CHina into the red hot India IPO and tech sector. A hawkish FOMC could see a rapid reverse of both. 


The Australian Dollar continues to bounce around on the daily changes in investor sentiment driven by omicron headlines. Overall, it remains near to its 2021 lows and in the background, nerves are rising over US inflation data and the FOMC meeting. Negative headlines from China over the weekend, or omicron, will put the AUD back under pressure next week. Equities continue to slavishly follow New York markets for direction.

RBA Gov Lowe and Lowe speak midweek, but are unlikely to give policy insight. NAB Biz Confidence, Westpac Cons. Sent. PMIs and Employment fill out a busy data week. Mostly it should show a rapid bounce from the lockdowns of Q3 and is bullish for equities and currency on the periphery. Employment will generate the most intra-day volatility.

New Zealand

The NZD/USD remains near to 2021 lows, underperforming the AUD/USD as negative global investor sentiment pushes both lower, and the cautious RBNZ policy decision continues to haunt the currency. 

Watch for New Zealand’s Covid case load as the country almost fully reopens this week. Surging cases will weigh on currency and local stock markets. 

New Zealand releases Service PSI, Biz Conf. Consumer Sent. the Current Account and GDP in a busy week. The GDP number presents the greatest volatility point.


Japan’s Tankan Large Manufacturing Survey on Monday, Trade Balance Thursday, and BOJ Policy Decision Friday, booked the week. The Tankan will generate a negative response in local equities if it is weak, throwing the recovery picture a slower gear. Volatility will be strictly intraday.

The BOJ will remain on hold with no changes, as it has for the last 20 years. The FOMC will have a greater impact with a hawkish tilt almost certainly sending USD/JPY much higher on yield differentials. Japan equities, ex intraday noise, will continue to slavishly track US equities and the Nasdaq in particular.



WTI crude seems to be following US stocks more so than stockpile data. This is ending up being a rather good week for crude prices as the crude demand outlook hit from Omicron might be limited.  OPEC+ continues to have a firm handle on the direction of prices and can disrupt any selloffs with a quick reverse of their output increase. 

Once Europe gets beyond this wave of restrictive movements and the north stops seeing milder weather, the rally in oil prices could easily make a run towards the highs seen last month.  


Gold is slowly getting its mojo back after a hot inflation report mostly matched estimates.  A lot of the inflation is stickier than anyone wants and that should keep gold’s medium- and- long-term outlooks bullish. Gold just needs to survive a firm consensus on how many rate hikes the Fed will start off with next year.  An accelerated rate hiking cycle is a big risk and could trigger panic selling that could prove troublesome for gold in the short-term, but that still seems unlikely to happen. 

Gold’s recent trading range of $1760 and $1800 might continue to hold up leading into next week’s FOMC decision.   


Before the US inflation report, many traders were noticing that Ethereum dominance is settling in. This has been a tough week for cryptos and Ethereum mostly outperformed. The global crypto market cap is around $2.2 trillion and while Bitcoin is still king with 39% dominance, Ethereum has now earned 20%. There is still a lot of motivation for more crypto products to be created and the growth outlook next year should limit whatever selling pressure enters.

Bitcoin prices initially after US inflation hit a 39-year high, but the rally stalled after reaching the $50,000 level. Given what happened last weekend, some leveraged traders are thinking twice about holding positions into this weekend. Some traders are anticipating a sideways market until the FOMC policy decision on Wednesday, so hesitancy to hold over the weekend might grow. Hodlers will likely remain unfazed and feel mostly confident as need for inflation hedges will grow given the widespread rising pricing trends.  

Key Economic Events

Saturday, Dec. 11

  • Day two of the G-7 foreign ministers meeting in Liverpool

Sunday, Dec. 12

  • Saudi Arabia to release budget
  • South Korean President Moon Jae-in starts a four-day trip to Australia.
  • Austria’s nationwide coronavirus lockdown winds down

Monday, Dec. 13

  • V4-France Summit in Budapest. Macron will hold a bilateral meeting with Hungary PM Orban.
  • South Korean President Moon Jae-in and Australian PM Morrison hold a joint news conference in Canberra.
  • US Secretary of State Blinken travels to Indonesia and will also visit Malaysia and Thailand  

Economic Data/Events:

  • New Zealand REINZ house sales, net migration, performance services index
  • India CPI
  • Japan machinery orders
  • Hong Kong industrial production, PPI
  • China medium-term lending
  • Turkey industrial production, current account

Tuesday, Dec. 14

  • Canadian Finance Minister Chrystia Freeland presents a budget update.
  • FOMC begins its two-day policy meeting.

Economic Data/Events:

  • US PPI
  • Eurozone industrial production
  • Australia consumer confidence
  • India wholesale prices
  • New Zealand food prices
  • Japan industrial production, capacity utilization
  • Mexico international reserves
  • UK jobless claims, unemployment

Wednesday, Dec. 15

Economic Data/Events:

  • FOMC Decision: Fed to accelerate tapering of asset purchases
  • US cross-border investment, business inventories, retail sales, empire manufacturing,
  • China industrial production, retail sales, property prices, fixed assets, surveyed jobless
  • UK CPI
  • Canada CPI
  • Poland CPI
  • South Africa CPI
  • Russia GDP
  • India Trade
  • Australia unemployment, Westpac consumer confidence
  • New Zealand BoP, current account GDP ratio
  • South Korea jobless rate, money supply
  • Japan tertiary index
  • Canada housing starts, existing home sales
  • EIA Crude Oil Inventory Data

Thursday, Dec. 16

  • EU Leader Summit starts in Brussels

Economic Data/Events:

  • US housing starts, initial jobless claims, industrial production
  • ECB Rate Decision: Rates to stay unchanged; To expand Asset Purchase Program
  • Mexico Rate Decision: Expected to raise Overnight Rate 25 bps to 5.25%
  • Norway Rate Decision: Expected to raise deposit rates 25 bps to 0.50%
  • Switzerland Rate Decision: no change expected to monetary policy
  • Turkey Rate Decision: Expected to cut one-week deposit rate by 100 bps to 14.00%
  • BOE Rate Decision: no change expected to monetary policy
  • Eurozone manufacturing PMI 
  • Germany manufacturing PMI 
  • UK manufacturing PMI 
  • Australia manufacturing PMI, consumer inflation expectations, jobless
  • New Zealand GDP
  • Japan Trade, Bank PMI
  • Singapore Trade
  • Hong Kong jobless rate

Friday, Dec. 17

Economic Data/Events:

  • BOJ Rate decision: expected to maintain its current monetary policy, while extending the duration of a trimmed Covid aid program  
  • Russia Rate decision: Expected to raise key rate 100 bps to 8.50%
  • Quadruple Witching Day and major US Indices quarterly rebalance effective after markets close
  • Eurozone CPI, new car registrations
  • Germany IFO business climate
  • Spain trade
  • Singapore electronic exports
  • Japan department store sales
  • Thailand foreign reserves, forward contracts
  • New Zealand ANZ consumer confidence

Sovereign Rating Updates:

– Lithuania (Fitch)

– Luxembourg (Moody’s)

– Slovakia (Moody’s)

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023.

His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies.

Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news.

Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal.

Ed holds a BA in Economics from Rutgers University.