Tomorrow's Macro Roadmap: Tokyo CPI, DE/FR/ES CPI, Swiss GDP & KOF, BOE’s Pill, US PPI & Chicago PMI, CFTC Positioning Data
In the morning, we get inflation data from a few eurozone members, Germany, France and Spain. Analysts expect a significant rise in French inflation in February as the base effect from the February 2025 electricity price cut drops out. French core inflation remains low compared to the rest of the region, partly owing to lower wage inflation. Spain’s inflation is underpinned by strong domestic demand. SEB notes ‘remaining differences among economies with strong demand lifting Spanish numbers, Germany showing signs of stagflation, while French and Italian numbers are rather muted.
The US PPI is the most important release on Friday because it provides the final missing input for the January core PCE inflation estimate — the Fed’s preferred measure. Analysts expect a slowdown in annual and monthly producer price inflation. Still, the ISM prices paid series and rising commodity prices would point to continued inflation pressure further down the road. One investment bank forecast, which is above the consensus, is driven by rising natural gas and refined petroleum prices during Winter Storm Fern.
Bank of England chief economist Pill is due to speak at 14:00 CET. Pill struck a notably hawkish tone at a Fireside chat at Santander UK macroeconomic event on 13 February, stating that rates at 3.75% are ‘a little bit too low’ and that the BoE had made ‘an error by cutting rates too far and too fast.’ He pegged underlying UK inflation at approximately 2.5% per year and argued that any near-term dip in headline inflation would be temporary. He advocated holding rates at 3.75% for longer until disinflation is complete. This puts him firmly at odds with the more dovish members of the MPC and Governor Bailey, who sees ‘scope for some further easing.’ Pill’s appearance on a UK & US economics panel suggests he may draw comparisons between the two economies’ inflation dynamics — watch for comments on wage growth persistence and the labour market. (BBG)