Key Economic Events to Watch Next Week: US PCE, Global PMIs, and Central Bank Decisions

Next week promises to be significant for global markets, with key economic indicators and central bank meetings scheduled. The US Personal Consumption Expenditures (PCE) price index will be closely monitored, as it is a critical measure of inflation that the Federal Reserve uses to guide its monetary policy. Analysts predict a modest increase in core PCE, suggesting inflation is stabilizing, which could influence the Fed's future rate decisions.

In Europe, the manufacturing and services Purchasing Managers' Index (PMI) data for September is expected to show a slight decline. The manufacturing PMI is projected to decrease to 45.5 from 45.8, while the services PMI may drop to 52.3 from 52.9, indicating a potential slowdown in economic activity. This follows a previous report where the composite PMI was at 51.0, suggesting that growth momentum is waning. Analysts at Investec warn that the positive effects from events like the French Olympic Games may fade, leading to a continued moderation in economic activity.

The Reserve Bank of Australia (RBA) is anticipated to maintain its Cash Rate Target at 4.35% during its upcoming meeting, with all surveyed economists predicting no change. The RBA has emphasized its commitment to controlling inflation, which remains above the target range. Recent inflation data has shown persistent pressures, suggesting that the central bank will keep rates steady for the foreseeable future.

In Sweden, the Riksbank is expected to cut rates by 25 basis points to 3.25%, with markets fully pricing in this move. The central bank's recent dovish shift indicates a willingness to consider further cuts, especially if inflation continues to moderate. The upcoming meeting will likely focus on guidance for future rate adjustments, with some analysts speculating on the possibility of additional cuts by the end of the year.

Mexico's central bank, Banxico, may also follow suit with a 25 basis point cut, reflecting a softer inflation environment and the need to support economic growth. Recent data has shown a cooling in inflation, which could provide Banxico with the flexibility to ease monetary policy further.

In Japan, the ruling Liberal Democratic Party (LDP) will hold a presidential election on September 27th, following Prime Minister Kishida's announcement not to seek re-election. The election will likely lead to a runoff, given the crowded field of candidates, including former Defense Minister Shigeru Ishiba and former Environment Minister Shinjiro Koizumi. The outcome could influence Japan's monetary policy direction, especially regarding interest rates.

Additionally, the Tokyo Consumer Price Index (CPI) metrics will be released, although expectations are low for significant surprises. Analysts will be watching for any indications of inflation trends that could impact the Bank of Japan's policy stance.

Finally, China's economic data will be scrutinized, particularly following recent disappointing figures on inflation and industrial production. The Caixin PMI will provide insights into domestic demand and market sentiment, which are critical for assessing China's economic trajectory.

Overall, next week’s economic calendar is packed with important indicators and central bank decisions that could shape market expectations and influence monetary policy across major economies.