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Monday also brings August CPI inflation, which probably inched up to 3.1% YoY from 3.0% YoY in July.

However, energy prices are still considerably higher than they were before the conflict. This means inflation may decline more slowly and unevenly than previously expected.

We expect headline inflation in the Philippines to soften modestly to 6.0% YoY amid lower retail fuel prices.

Core inflation pressures, though, should remain elevated, with food inflation continuing to pick up.

Meanwhile, the market expects headline CPI inflation to accelerate to 3.2% YoY in August, from 2.8% in July.

Tokyo CPI excluding fresh food rose 1.8% year-on-year in August, accelerating for a third consecutive month and strengthening the case for a Bank of Japan increase, with September now in focus.

Tokyo CPI rose 1.9% YoY in August from 1.8% in July, in line with consensus.

Today’s remarks also indicate that Chairman Warsh is closely focusing on the headline PCE deflator as his preferred inflation metric

Additionally, recent inflation data showed tentative signs that stronger AI-related demand may be contributing to price pressures.

U.S. headline and core consumer prices both rose 0.2% in July, lifting their annual rates to 3.7% and 3.3%, respectively.

The incoming data since the June meeting were seen as containing both reassuring elements and reasons for continued vigilance and caution, although the risks to inflation remained to the upside.

New tariffs threaten those improvements. Inflation is particularly problematic given price pressures are a persistent issue, and in contrast to Canada where inflation has been better contained.

The Bank of Canada (BoC) left its policy rate unchanged at 2.25%, in line with expectations.

According to Eurostat's Flash estimate, the Euro area annual headline inflation averaged 3.26% in August (higher than our estimation of 3.20%), up from 2.94% in July.

We expect market pricing for Fed rate hikes to recede as confidence in continued disinflation increases

In more practical terms, he stated that “we must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed… otherwise, we have work to do.”

The stage looks increasingly set for another rate hike at next week's ECB meeting.

Franklin Templeton Fixed Income CIO Sonal Desai believes that he may be the most hawkish chair since Paul Volcker. Warsh stressed that the Fed can and will bring inflation back to 2%

If the Fed is serious about bringing inflation back to target, it will need to nudge the policy rate up.

Capurso said the risks were tilted towards a fourth increase being needed.

We still believe the doves prevail in September (aided by data), but it’s a very close call!

A positive employment surprise in the US could cement a September hike.

it is hard to see that the ECB would be willing to risk a recession to tackle what is still a textbook supply-side shock.

Elsewhere, ECB's Dolenc also reinforced expectations for a September hike as "we see that the inflation situation doesn't resolve itself."

Hike odds have risen, but not odds-on; Short duration nation.

In contrast, BOE's Bailey suggested "we can watch this situation for the moment" due to subdued second-round effects and a softening labour market.

The ECB can legitimately hike rates in September, particularly against a backdrop of rising natural gas prices. But anything more than that, as my colleague Carsten wrote this week, would take it into restrictive territory without a compelling reason for doing so.

The jobs report is the big event of the week and will be a key determinant of whether the Fed hikes rates on 16 September.

The broad takeaway is that with the kind of growth we’re seeing in the interest sensitive sectors, the last thing that the Bank of Canada would wish to do would be to throw kerosene onto the economy by cutting rates

In Wednesday’s meeting, we expect the BoC to acknowledge both this strength and forward-looking risks-a balance that should leave interest rates unchanged.

but further escalation in tariffs is a real threat that could prompt a delay of BoC rate hikes we had expected in 2027, or worst, push the central bank to cut rates.

If that changes, the RBA may still need to hike rates again.

We expect Kazakhstan to cut its base rate by a cautious 25bp to 16.50% on Friday 4 September, provided August CPI, due on 31 August, falls into single digits from 10.2% YoY in July.

Warsh’s less-guided approach to monetary policy has increased policy uncertainty.

Cleveland Fed President Beth Hammack expressed similar concerns and reiterated her ongoing willingness to hike rates to bring price pressures back under control.

We continue to expect the Bank of Canada to keep interest rates unchanged through the remainder of 2026.

And here in Britain, I don’t think it’s going to be long before we’re talking about the first rate cut.

including solid 3.3% (annualized) GDP growth in Q2 and on-target core inflation prints since April.

If we are right, and growth continues to slow, then there is the prospect of 1-2 rate cuts in mid-2027.

We think the Fed appears comfortable keeping rates modestly restrictive while monitoring whether inflation is broadening and becoming embedded in expectations.

But uncertainty over the exact path of interest rates is likely to remain elevated given Warsh’s communication style, the ongoing war in the Middle East, and continued strength in AI investment.

However, we continue to lean towards the RBA remaining on hold.

Rising headline and perhaps core rates too can keep another 50-60bp of ECB tightening priced into money market curves and probably keep the euro supported.

Key rate hikes are a blunt tool for strengthening the krona and have undesirable side effects.

Fed funds futures are currently pricing in 26.4bp of rate hikes for 2026.

The Bank of Korea raised rates by 25bp to 3.00% at its meeting today

Higher for longer is hawkish for many central banks.

positioning has been built around a hawkish tone intended to anchor long yields.

The Bank of Korea delivered a back-to-back 25 basis point rise to 3.00% in a six-to-one decision, citing an unprecedented semiconductor boom driving stronger-than-expected growth.

If the Federal Reserve is truly serious about potentially renewing rate hikes, then the BoC could be dragged higher given a multi-decade high on the current policy rate spread (chart 4).