- Mon: Australian Holiday (Australia Day), German Ifo (Jan).
- Tue: Chinese Industrial Profits (Dec), US Richmond Fed (Jan), US Consumer Confidence (Jan).
- Wed: Fed Policy Announcement, BoC Policy Announcement,
BCB Policy Announcement, Australia CPI (Q4), German GfK (Feb), NZ Trade
(Dec). - Thu: Riksbank Policy Announcement, CBRT Minutes, EZ Money Supply (Dec).
- Fri: German Import Prices (Dec), German Unemployment (Jan), German GDP (Q4, flash), HICP (Jan), EZ GDP (Q4, flash).
- Sat: Chinese NBS PMI (Jan).
Chinese Industrial Profits (Tue): The previous
release (covering January-November 2025), showed a sharp loss of
momentum, with YTD profits at major industrial firms up just 0.1% Y/Y,
slowing sharply from 1.9% growth in the first ten months. November
profits alone fell 13.1% Y/Y, after a 5.5% drop in October, marking the
steepest monthly contraction in more than a year. By sector, resilience
was confined to high-tech manufacturing, where profits rose 10%, and
equipment manufacturing, up 7.7%, while heavy industry remained a major
drag, with coal mining and washing profits down 47.3% and oil and gas
extraction down 13.6%. By ownership, state-owned enterprises reported a
1.6% Y/Y decline in profits, while private firms slipped 0.1%. Analysts
cited weak domestic demand and persistent factory-gate deflation,
warning profits remain vulnerable unless pricing power and demand
improve.
Australian CPI (Wed): The ABS is due to
publish December and Q4 inflation data, with the focus firmly on the
quarterly print. Headline CPI stood at 3.4% Y/Y in November, remaining
above the RBA’s 2-3% target band, though the central bank in December
said that recent firmness in underlying inflation reflected temporary
factors, while also flagging increased noise in the monthly CPI series.
Attention now turns to Q4 after CPI in Q3 edged up to 3.2% Y/Y. NAB
expects a notably firm outcome, forecasting trimmed mean inflation at
0.9% Q/Q and 3.3% Y/Y, above the RBA’s own projections of 0.75% Q/Q and
3.2% Y/Y, citing ongoing pressure from housing costs, services inflation
– particularly seasonally strong travel prices – and new vehicles. Any
upside surprise in Q4 inflation would reinforce the Bank’s tightening
bias amid a still-tight labour market, even as market pricing implies
about a 60% chance of a February cut (up from roughly 30% before the
latest employment data).
BoC Policy Announcement (Wed):
Canada headline CPI rose to 2.4% Y/Y in December from 2.2%, slightly
above expectations, reflecting higher food, alcohol and selected goods
prices. The increases were driven in part by unfavourable base effects
linked to last year’s GST holiday, which more than offset a sharp
monthly decline in energy prices. Measures of core inflation were
broadly stable: CPI excluding food and energy edged higher, but the
BoC’s preferred core measures eased, suggesting underlying price
pressures remain contained. Oxford Economics argued that the Bank will
not be swayed by M/M volatility in headline inflation caused by base
effects, instead focusing on the underlying trend, which both it and the
BoC see in the mid-2% range. Oxford Economics also highlighted ongoing
upside risks from US tariffs and elevated trade policy uncertainty, and
continues to expect the BoC to keep rates on hold at 2.25% until early
2027. Meanwhile, the BoC’s Business Outlook Survey sends a similar
signal. While businesses are more optimistic about sales and point to
firmer GDP growth, they still anticipate layoffs and continue to face
persistent cost pressures. According to NAB, this combination provides
little evidence that inflation risks have fully receded, reinforcing the
case for policymakers to remain on hold until there is clearer
confirmation that price pressures are durably under control.
Fed Policy Announcement (Wed):
The FOMC is widely expected to leave the policy rate unchanged at
3.50-3.75% at next week’s meeting. As has been the case for several
meetings now, the decision itself matters less than the guidance,
particularly around how patient policymakers intend to be before easing
eventually comes into view. A Reuters poll showed unanimous expectations
for no change at this meeting, while 58% of economists also see rates
staying on hold through the quarter. Recent data continue to underline
resilient US growth and sticky inflation, which together argue against
any urgency to cut rates. The economy expanded strongly in the H2 2025,
while inflation remains above target, reinforcing the Fed’s preference
for patience. Policymakers are therefore likely to repeat their
data-dependent messaging and avoid signalling that easing is imminent.
Markets will pay close attention to Chair Powell’s press conference for
any tonal shift, particularly given growing political pressure on the
central bank. Public criticism from President Trump and ongoing legal
scrutiny related to the Fed’s HQ renovation have raised questions around
institutional independence, though officials are expected to steer
clear of political commentary. Analysts said that, overall, the balance
of risks still points to rates remaining on hold through Q1, with cuts
more likely later in the year if inflation shows clearer signs of
moderation. Further hikes remain very unlikely, but strong growth and
expansionary fiscal policy suggest that any easing cycle, when it comes,
is likely to be gradual. Few surprises are expected from the meeting,
leaving markets focused on Powell’s assessment of inflation persistence,
labour market tightness and financial conditions.
BCB Policy Announcement (Wed):
Policymakers are expected to maintain a cautious tone following
December’s decision to hold the Selic rate at 15.00%. At that meeting,
the central bank described the current policy stance as “adequate” to
deliver inflation convergence over time, while emphasising that future
steps may be adjusted as needed. This wording leaves room for renewed
tightening should inflation pressures re-emerge, but also preserves
flexibility for eventual easing once confidence in the disinflation path
improves. Pantheon Macroeconomics viewed the shift in language from
“sufficient” to “adequate”, alongside a return to “as usual” vigilance,
as signalling slightly higher confidence without constituting a clear
dovish pivot, and continues to characterise the BCB’s stance as hawkish.
Pantheon expects the current hold to extend into early 2026 as
policymakers seek to re-anchor expectations. Since the December meeting,
however, inflation data have surprised to the downside, strengthening
the case for eventual easing. Annual inflation for 2025 slowed more than
both the central bank and markets had anticipated, ending the year at
4.26% and within the official target range, contrary to earlier guidance
that inflation would remain above the 4.5% upper limit until late Q1
2026. Inflation had already returned to target in November, earlier than
expected, and cooled further in December, undershooting both market and
central bank forecasts. The BCB has attributed the improved near-term
outlook to a combination of a more benign inflation trend, better
expectations, cheaper fuel, a stronger currency and lower oil prices,
all under a restrictive policy stance. Pantheon continues to see a first
rate cut as more likely in March rather than January.
Riksbank Policy Announcement (Thu):
The Riksbank is widely expected to keep rates steady at 1.75%, in line
with the rate path set out at the December meeting, a decision that
follows cooler-than-expected inflation for that period. CPIF slowed to
2.1% Y/Y from 2.3%, undershooting the Riksbank’s own forecast. On the
activity side, GDP rebounded more than expected in November, while
household consumption also beat expectations in the same period.
Elsewhere, the labour market remains subdued. Against this backdrop,
analysts at SEB expect the bank to hold rates in January and through the
rest of the year, though they see some chance of a cut in spring or
summer if the inflation continues to deteriorate. As a reminder, at its
last meeting, the Riksbank kept rates unchanged at 1.75% and reiterated
that the policy rate is likely to remain at this level for some time.
The current monetary policy report shows rates on hold for the next
three quarters, with only a small chance of a hike in Q4 2025.
Tokyo CPI (Fri):
The previous release showed Tokyo core CPI (ex-fresh food), slowing to
2.3% Y/Y from 2.8%, undershooting expectations, while headline inflation
eased sharply to 2.0% from 2.7%. Core-core CPI (ex-fresh food/energy),
also moderated to 2.6% from 2.8%. The deceleration was driven largely by
lower energy and utility costs, alongside a slowdown in processed food
price increases. Despite the cooling, all measures remain at or above
the Bank of Japan’s 2% target, reinforcing expectations that the BoJ
will continue to normalise policy cautiously rather than accelerate
tightening. At this week’s BoJ meeting, the central bank’s outlook
suggests inflation will remain close to, but not sustainably above, its
2% target. Headline inflation is expected to undershoot 2% in the near
term, while underlying inflation is approaching the target but remains
some distance away. The BoJ’s forecasts imply inflation eases from 2.7%
in 2025 towards 2.0% by 2027, with limited risk of overshooting.
Policymakers see growing evidence that wage gains are feeding into
prices, raising confidence in eventually achieving 2%, though progress
since December has been modest. Policy will remain accommodative for
now, but the BoJ intends to raise rates further if its outlook
materialises, with decisions guided by developments in underlying
inflation, wages, FX-driven import costs and key data such as April
prices, rather than waiting mechanically for past tightening to take
full effect.
EZ Flash GDP (Fri): Eurozone Q3
printed 0.3% Q/Q, and 0.4% Q/Q for the EU as a whole, picking up from Q2
levels. The main read ahead of the data comes from Germany, where a
very early Q4 estimate showed 0.2% Q/Q growth. PMI readings point to
growth in the period, though Germany remains an area to watch for Q4 as
industry saw a downturn in the quarter, according to HCOB/S&P
Global. The ECB has recently highlighted that growth has been more
resilient over 2025, which has been a key driver in changes for policy
rate expectations. Overall though, the data is unlikely to have any
material impact on the ECB’s outlook, with the Deposit Rate on hold in
the “good place” of 2% in the near term.
