US will be most closely watched in the wake of a higher-than-expected core inflation reading
Published Sun, Sep 13, 2026 · 04:12 PM
CENTRAL banks from much of the Group of Seven (G7) face a pivotal week as mounting inflation risks heap pressure on them to raise interest rates.
Three decisions, starting with the US Federal Reserve on Wednesday (Sep 16) and followed on successive days by peers in the UK and Japan, may recast the global monetary policy landscape for the rest of 2026 and beyond.
The US will be most closely watched in the wake of a higher-than-expected core inflation reading on Friday. That stoked investor bets that Fed chairman Kevin Warsh and his colleagues will raise their benchmark rate, probably in defiance of US President Donald Trump’s wishes.
A Bank of England rate increase on Thursday is not anticipated, but with three officials having favoured such a move at the late-July meeting, and with price risks simmering, the prospect of shifting towards a hike as soon as November cannot be excluded.
The Bank of Japan (BOJ), meanwhile, is widely predicted to raise its key rate at the end of the week after a raft of supportive data, including the nation’s biggest jump in wages in nearly three decades.
With oil emphatically above US$100 a barrel again and the Middle East war apparently reigniting, any hope among policymakers for a respite in global price pressures seems faint for now.
After European Central Bank officials tightened on Thursday, the second such move since the outbreak of the Iran conflict, investors may well end the week with the picture of an increasingly synchronised hawkish policy stance across the G7 coming into clearer focus.
The club’s other institution, the Bank of Canada, is moving that way too. Minutes of its decision earlier in September, when officials kept rates steady but emphasised inflation concerns, will be published on Wednesday.
Elsewhere, Chinese industrial data, inflation numbers from the UK and Canada to India and Japan, and a probable rate cut in Brazil will be among the highlights.
SEE ALSO
US and Canada
Warsh said in August that the Fed would “have work to do” if it could not “be confident that underlying inflation is moving to our objective, clearly and at sufficient speed”. Friday’s inflation data offered no such comfort. Investors and economists now see it as a near certainty that the US central bank will raise interest rates for the first time in three years.
Support for such a move had been building at the Fed, even before the latest figures. In July, three officials dissented against the decision to hold rates steady and instead would have preferred to hike. Policymakers on Wednesday will also release updated projections for economic growth, inflation and the outlook for rates.
The week’s US data docket includes retail sales, which are expected to rebound in August, as well as fresh figures on housing starts and industrial production.
In Canada, August inflation data on Monday will give more evidence on the state of the economy entering a jittery third quarter, dominated by the escalating tariff war with the US.
Asia
The main focus of the week will be China’s August data dump on Tuesday, set to provide the most comprehensive official look at what happened in the economy in August.
Forecasts show that economists do not expect much of a pickup from July, when the economy slowed almost across the board. As has been the case all year, Chinese production and exports of AI-related tech products have expanded rapidly, but the rest of the economy is in a funk.
India’s August inflation data, due on Monday, will be watched to gauge if price pressures are broadening, which could offer clues on how soon the Reserve Bank of India may raise rates. On the same day, the Pakistan central bank will announce its rate decision, with economists expecting a hold.
The BOJ’s probable hike on Friday would be its second of the year. That would take the policy rate to 1.25 per cent, the highest level since 1995, and maybe provide more support to the yen, which has risen in recent weeks.
The same morning, the government will report national consumer price data for August, with inflation forecast to have risen 2 per cent from a year earlier.
India, Japan and New Zealand will all report August trade data in the coming week, with Japan’s imports and exports expected to have continued the rapid growth they have shown all year when the data is released on Wednesday.
New Zealand on Thursday reports second-quarter gross domestic product growth, with the economy forecast to have expanded more slowly than in the first quarter.
That will be the last GDP release before the national election in November, and may be a factor for voters as they decide whether to re-elect Prime Minister Christopher Luxon. Sri Lanka will also report GDP on Tuesday. BLOOMBERG
