(Reuters) -The moment investors – and at least one occupant of the White House – have been waiting for is almost here.
The Federal Reserve is one of a number of major central banks that meets in the coming week to set monetary policy, and its decision could set the tone for markets for the rest of the year.
Here’s your look at the week ahead from Kevin Buckland in Tokyo, Alden Bentley in New York and Dhara Ranasinghe, Karin Strohecker and Amanda Cooper in London.
1/ THE FED, FINALLY
The week’s main event is shaping up to be a resumption of U.S. monetary easing after a nine-month pause. Over the past two weeks, bad news on the jobs front and tame inflation readings from CPI and PPI reports have paved the way for the Fed to cut rates by at least 25 basis points after its Tuesday-Wednesday meeting, resuming the easing path that ran from last September to December.
Some Fed officials, including Chair Jerome Powell at the Jackson Hole symposium last month, have been signalling a cut was coming. The questions have been: when? and how many? President Donald Trump, for one, believes the answers are something like: immediately, and a lot.
Betting in futures markets suggests a quarter-point cut in the 4.25%-4.5% Fed funds target is all but certain, with a 10% chance of a super-sized 50 bps cut. By December, at least 75 bps of easing is priced in.
2/ BOJ TIMING
Whether or not U.S. Treasury Secretary Scott Bessent is right about the Bank of Japan being behind the curve, a rate hike on September 19 looks like a long shot.
For one thing, Japan won’t know who its next prime minister is until October 4 at the earliest, and the front-runners couldn’t be much further apart in their views on fiscal and monetary policy.
Sanae Takaichi, potentially the country’s first female premier, is an Abenomics disciple backing higher spending and looser monetary conditions. Shinjiro Koizumi, who at 44 would be its youngest premier, is the continuity candidate, close to outgoing fiscal hawk Shigeru Ishiba.
Another complication is potential Fed easing. A BOJ hike in that environment could roil Japan’s already fragile bond market, accelerate yen strength, and knock stocks off their record peaks.
Traders now see a rate hike by year-end as a coin toss, compared with a 72% bet last month after Bessent’s last jab.
3/ READY FOR MORE?
Europe’s not missing out on a central-bank packed week.
The Bank of England is tipped to hold rates steady on Thursday, and analysts have pushed back forecasts for future rate cuts, citing sticky inflation.
August inflation numbers are out a day earlier and could add to a sense that further cuts are unlikely soon. UK jobs data is released on Tuesday.
Still, the UK isn’t alone in grappling with higher-than-anticipated inflation that casts doubt over central banks’ ability to keep cutting rates.
Norway’s central bank also meets on Thursday.
Markets are pricing a roughly 70% chance of a quarter-point rate reduction, but underlying inflation – running at 3.5% year-on-year – makes traders less confident of a move.
A day after the Fed, Thursday’s European rate decisions are likely to highlight a growing dispersion among big central banks.
4/ …AND THEN THERE IS THE REST
Several major emerging market central banks also have rate decisions.
Having announced a new and lower policy objective of achieving 3% inflation, central bankers in South Africa will have to re-anchor inflation expectations and might keep rates on hold at 7%, with some expecting there is room to cut soon.
Brazil – having hiked 450 bps over the past 12 months – is expected to keep rates at a nearly 20-year high of 15% on Wednesday. But slowing growth and downside inflation surprises could spark debate on when cuts might start.
Faced with uncertainty over fiscal expansion, analysts are undecided over whether Indonesia’s central bank will cut, or keep rates at 5%, on Wednesday after the sacking of respected Finance Minister Sri Mulyani – widely seen as one of the few checks on President Prabowo Subianto’s big growth and spending promises that have unnerved many investors.
5/ NOT BAD FOR A RELIC
Gold has virtually doubled in value in the space of three years and is up nearly 40% in 2025, set for its strongest yearly gain since 1980’s 126% surge. It has beaten even bitcoin, which is up “only” 22%.
A weaker dollar tends to favour gold, as do falling interest rates and lower real yields – those that strip out inflation.
What else favours gold – and has been delivered in spades this year – is geopolitical uncertainty, persistent inflation and a desire to ditch dollars. The price has vaulted above $3,600 an ounce and a lot of demand is coming from central banks and other buyers with a longer investment horizon.
Not bad for what economist John Maynard Keynes once dubbed the “barbarous relic”.
(Compiled by Amanda Cooper; Graphics by Kripa Jayaram; Editing by Hugh Lawson)
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