Week of the World Economy by Bloomberg

(Bloomberg) – The Federal Reserve is about to cut again this week and may not yet provide monetary stimulus.

Having already trimmed their benchmark in July to 2.0% -2.25%, President Jerome Powell and his colleagues will have an additional 25 basis points on Wednesday to support the economic downturn, according to a study by Bloomberg of 39; economists.

One of the key questions that will be asked of Powell is whether he is preparing for more than the "mid-cycle" adjustment he had previously stated was underway. Economists now estimate that it will act again this year before leaving the target range of 1.5% to 1.75% for an extended period.

It should also be noted how many political decision-makers will dissent after Fed Regional Presidents Eric Rosengren and Esther George voted in July in favor of withholding rates, giving Powell its first double dissent since joining the Fed. the head of the Fed in February 2018.

What Bloomberg Economists Say

"Bloomberg Economics expects policymakers to reduce their rates in 25 basis points increments until the yield curve is no longer reversed. We believe that this means rate cuts in September, October and December – although officials may be reluctant to wire such intentions for the time being, especially when trade negotiations are underway. "- Carl Riccadonna, Yelena Shulyatyeva, Andrew Husby and Eliza Winger complete note.

In the meantime, the Fed will be followed on Thursday next week by investor pressure to follow its counterparts in the United States and the euro zone by easing monetary policy again. Next week, the central banks of ,, and

The trade war between the United States and China, announced last week by Bloomberg, is another major objective for investors. She explained that Trump administration officials had planned to offer China a limited trade deal that would delay and even lower some US tariffs.

This is our weekly summary of what is happening in the global economy.

United States and Canada

Fed officials begin to meet Tuesday before making their decision Wednesday to Powell, who will then address reporters. As they gather, they will have new data for August, with economists expecting a gain of 0.2%.

As negotiations with China are about to resume in October, Twitter and local Chinese media will be monitored for any signs of improved relations between the two sides. There are also figures Wednesday morning and Thursday. Thursday will also see the release of data for the second quarter. We will monitor the signs of fallout from the trade war between the United States and China. In Canada, the election campaign will enter a second week.

• For more information, read the full report of the upcoming Bloomberg Economics Week in the United States.

Asia

The Bank of Japan is meeting Thursday, although market pressure to boost stimulus has weakened as investors look less bright on the economic outlook and the trade war. This leaves most economists expecting the BoJ to keep its policy in abeyance as it retains its ammunition. Nevertheless, a surprise decision by the Fed or worries about the economic impact of an impending rise in the sales tax could still prompt the central bank to act.

Meanwhile, Monday, a series of data from China will show how his economy is already slowing down in the middle of the trade war. Bloomberg Economics expects to remain under pressure after dropping to 4.8% in July, its lowest level in 17 years, while there are few signs picked up in August either. is also seen staying sluggish. Pakistan should keep interest rates unchanged on Monday. On Tuesday, the Reserve Bank of Australia released its last meeting during which it was in no hurry to relax its policy again. The Indonesian central bank is expected to pause after two consecutive rate cuts.

• For more information, read the upcoming Bloomberg Economics Weekly publication for Asia.

Europe, Middle East and Africa

The week could be marked by the repercussions of the stimulus package of the European Central Bank. Eurozone policymakers are expected to express themselves after some have opposed President Mario Draghi's bond buying program. Governments will also be asked about their intention to answer Draghi's call for help.

The Swiss National Bank will also decide Thursday to follow or not its largest neighbor with a reduction in its own rate, already the lowest in the world. The Norwegian central bank could reverse the global trend by increasing its benchmark on the same day. The final decision of the Bank of England before the date currently set for Brexit offers Governor Mark Carney and his colleagues the opportunity to adjust their expectations as they wish. On the data side, the German index on Tuesday will provide more clues as to whether Germany has avoided a technical recession.

Ghana and South Africa are unlikely to join the wave of easing global monetary policy when their central banks meet Thursday and Friday, after cutting once this year.

• For more information, read Bloomberg Economics' upcoming week's report for the EMEA region.

Latin America

In a week with few economic indicators, the Brazilian central bank should attract the attention of investors. While policymakers should lower Selic's policy rate by half a percentage point again on Wednesday, an unprecedented record, the policy makers' statement after the meeting is expected to provide clues about cutting borrowing costs. On Thursday, Argentina is expected to release its unemployment data for the second quarter, which could indicate that the labor market was already deteriorating even before local markets began to sell.

Argentina still in recession

• For more information, read the upcoming Bloomberg Economics Weekly publication for Latin America.