Key Economic Events Today: Eurozone GDP, German CPI, BoE Decision, US GDP and PCE
Key Takeaways
- •Eurozone Q2 GDP is forecast at 0.2%, recovering from a prior contraction of -0.2%, though the figure is unlikely to influence ECB policy given its stronger focus on inflation dynamics.
- •German CPI year-over-year is projected to rise to 2.7% from 2.3%, with market attention centered on the core inflation measure due to Germany's significant weight in Eurozone CPI calculations.
- •The Bank of England is expected to hold the Bank Rate at 3.75% with a 7-2 vote split, and any removal of the phrase "as necessary" from forward guidance would signal a hawkish shift toward an imminent rate hike.
- •US Q2 GDP is forecast at 2.0%, marginally below the prior 2.1%, and is unlikely to change the Federal Reserve's outlook as the central bank prioritizes inflation data.
- •The US PCE price index year-over-year is projected at 3.3%, down slightly from 3.4%, but the release is largely considered old news since it can typically be forecast using CPI and PPI inputs.
European Session
The European session features three major releases: Eurozone Q2 GDP, German CPI data, and the Bank of England rate decision.
Eurozone Q2 GDP is forecast at 0.2%, rebounding from a prior reading of -0.2%. The figure is unlikely to shift the European Central Bank's stance significantly, as the ECB remains more focused on inflation dynamics. The ECB had already delivered multiple rate hikes over the prior year, leaving growth data as a secondary input relative to incoming inflation prints.
On the inflation front, the session includes German state-level inflation readings followed by the national CPI. Spanish inflation figures are also scheduled for release. German data typically carries greater market impact due to its larger weight in Eurozone CPI calculations. German CPI year-over-year is projected at 2.7%, up from 2.3% previously, though attention will center on the core measure.
The Bank of England rate decision rounds out the European calendar. The central bank is widely expected to hold the Bank Rate steady at 3.75%, with a projected 7-2 vote split — Pill and Greene anticipated to vote in favor of a hike. The decision comes against a backdrop of UK inflation persistently running above target and among the highest in the G7 economies. Forward guidance in the statement will likely remain unchanged, with the committee expected to reiterate that it "stands ready to act as necessary to ensure that CPI inflation remains on track to meet the 2% target in the medium term." Any removal of the phrase "as necessary" would be interpreted as a hawkish signal pointing toward an imminent rate hike. The BoE will also publish its updated quarterly projections at this meeting.
American Session
The American session brings US Q2 GDP, the US PCE price index, and weekly jobless claims data.
US Q2 GDP is expected at 2.0%, slightly below the prior 2.1%. The release is unlikely to alter the Federal Reserve's outlook, as the central bank remains laser-focused on inflation. The upcoming CPI report is expected to be the deciding factor in whether the Fed raises rates in September.
The US PCE price index year-over-year is forecast at 3.3%, down from 3.4% prior, while the month-over-month measure is seen at -0.1% compared to 0.4% previously. Core PCE year-over-year is projected at 3.3% versus 3.4% prior, with the month-over-month figure expected at 0.2% against 0.3% previously. As the Fed's preferred inflation gauge, the PCE index carries institutional significance, yet the release rarely serves as a major market-moving event. It is largely considered "old news" — it can typically be accurately forecast using inputs from the CPI and PPI reports.
US Initial Jobless Claims are anticipated at 200,000, up from 187,000 prior, while Continuing Claims are seen at 1,795,000 compared to 1,796,000 previously. With the Fed's attention fixed on inflation, jobless claims data is unlikely to drive significant market reaction absent very large deviations. The US labor market remains stable.