Subdued disinflation and cooling activity will occupy the ECB council at its meeting next week. Inflation is of interest in the US and CEE, where central banks gained attention this week via a surprising rate cut in Poland. Next week more rate cuts are expected in Ukraine.
Euro area inflation, this week's highlight, came in as expected - no further acceleration but not yet decelerating. In CEE, the process of disinflation continues, albeit at a slower pace than in the last months. Meanwhile, GDP dynamics are less uniform.
Jackson Hole and next week’s releases on inflation and labour markets could shift expectations on Western central bank moves in September into either direction. In CEE, steady rate cuts are in the cards for Hungary. CPI readings from Poland may support a rate cut.
The rating downgrade of the US by Fitch caused some unease on markets. However, the impact to the real economy should be limited. Concerning the real economy, recent and upcoming GDP data offer a last look back into Q2. Else, inflation data are worth to look at.
Central bank meetings and a pile of macro data will shape the economic landscape in the West throughout the next two weeks. In CEE, rate hikes surprised in Russia and Serbia while cuts are awaited in Hungary and Ukraine next week. Easing may start after summer also in Poland.