Federal Reserve Chairman Jerome Powell has hinted that monetary tightening is likely to be over, and discussions about interest rate cuts are about to “come into view” as 2023 comes to an end. This week, investors will receive the last batch of U.S. inflation data this year, including the Fed’s favorite inflation measure.
The PCE price index, which is the Federal Reserve’s main indicator for measuring inflation, will be released on Friday. Economists expect the data to show that the PCE price index will remain at 0.2% for the second consecutive month in November, while the core indicator, which excludes fluctuations in food and energy costs, will reach 2.0% on a monthly basis.
At the same time, the Bank of Japan will hold a monetary policy meeting this week, and there are growing expectations that the bank may end negative interest rates in the coming months. Investors will also be watching for any signs of a possible shift in the Bank of Japan’s monetary policy statement for the next meeting in January.
Gold prices are on track to rise for the first time since 2020, driven by a weaker U.S. dollar and growing expectations for an interest rate cut in 2024. The prospect of lower interest rates increases the appeal of holding precious metals, despite real U.S. yields reaching their highest point in eight years.
In addition, China will announce the LPR interest rate on Wednesday, while the UK will publish its latest inflation data. Analysts generally expect the LPR interest rate to remain unchanged in China, while the UK’s inflation reading is currently more than twice the Bank of England’s 2% target.
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Compiled by Liu Chuan.