Week Ahead: Draghi’s last ECB meeting and US inflation

Next week’s main macro event is probably going to be Mario Draghi’s last policy meeting as the ECB President. Will he go out with a bang?

Next week’s main macro event is probably going to be Mario Draghi’s last policy meeting as the ECB President. Will he go out with a bang? In addition, we have inflation figures from the US and — not that they would matter much as far as market reaction is concerned — some key economic pointers from the UK. Here are the data highlights for next week:


  • German trade figures and Eurozone Sentix Investor Confidence Index
  • UK GDP, manufacturing production and construction output (all monthly figures)


  • UK average earnings index
  • US housing market data (housing starts and building permits)


  • US core PPI


  • Chinese trade figures
  • ECB rate decision and press conference
  • US CPI


  • US retail sales

ECB unlikely to re-launch QE - for now anyway

The euro will clearly be in focus next week with the European Central Bank meeting on tap for Thursday. Significantly, it will be Mario Draghi’s last meeting as the head of the central bank, before Christine Lagarde takes over. There has been some suggestions that the Italian will go out with a bang and announce more quantitative easing to stimulate the flagging Eurozone economy - not least Germany, where incoming data has been truly shocking. However, with interest rates already at zero and having only recently ended their QE programme, some would argue that the best course of action would be to take no action at all, even if — as Mr Draghi put it in July — the economic outlook is “getting worse and worse.” Indeed, there could be an element of hawkish surprise at this meeting. Several ECB officials have spoken against QE, including Jens Weidmann, Klaas Knot, and Madis Muller in recent days. With this much opposition, Mario Draghi will probably not want to create a mess for his successor to clean up.

US inflation last significant data before Fed meeting

Meanwhile, with the latest employment figures disappointing expectations following a very poor manufacturing PMI earlier in the week, this has further cemented speculation over a rate cut by the Fed later this month. Ahead of the September 18 meeting, we will have two more key data releases next week which the Fed might take into account when deciding on interest rates: Consumer Price Index (Thursday) and Retail Sales (Friday). Unless CPI is shockingly weak, it is safe to assume the Fed will only cut rates by 25 basis points rather than 50. We doubt that retail sales will change that view either. Still, it could trigger some movement in the FX and stock markets. After a strong 0.7% m/m increase in spending last month, traders will be watching for any signs of a slowdown, especially after last month’s tariff escalations.

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