Markets Gear Up for FOMC Meeting Amid Rising Inflation Concerns

A busy week ahead for markets as several key events and data releases are expected. On Monday, Canada will release inflation data, while Tuesday will bring the U.K.'s claimant count change, average earnings index, and unemployment rate. The day's highlight will be the FOMC meeting on Wednesday, where a 25 bps rate hike is expected following strong inflation data.

The U.S. will publish retail sales m/m figures on Wednesday, with analysts expecting a rebound of 0.7% in August. The core PCE appears to be running above the Fed's comfort zone, with a three-month annualized rate of 2.7-2.8%. Inflation data from Japan picked up again, with headline and core CPI expected at around 2.0% in August.

The BoE is expected to keep rates unchanged at 3.75%, despite concerns over inflation remaining high. However, ING analysts expect the Bank to strike a slightly more hawkish tone this week, while arguing that current interest rates are already restrictive. The BoJ is widely expected to raise its policy rate by 25 bps to 1.25%.