(Bloomberg) —<\/span> The upcoming Bank of Japan meeting offers scope for sharp movements in the yen as investors try to gauge the timing of its next hike \u2014 with a looming election adding to the confusion.<\/p>\n All 52 economists surveyed by Bloomberg see an unchanged outcome on Friday after policymakers raised their overnight interest rate last month to 0.75%, the highest in 30 years. While that move further narrowed the gap in rates with the US, it has done little to stop downward pressure on the currency.<\/p>\n Most Read from Bloomberg<\/p>\n That means Governor Kazuo Ueda will need to tread carefully during a post-decision press conference to ensure that the widely expected outcome doesn\u2019t trigger another yen selloff. He\u2019ll have to make clear that rates will keep going up, without boxing himself into an early move. And if he sticks too passively to existing language, yen bears may try to push their luck further.<\/p>\n Ueda has plenty of reasons to lift borrowing costs again. Data on Friday are set to show Japan\u2019s inflation has averaged above the 2% target for four straight calendar years, the latest sign that price growth is embedded into the economy.<\/p>\n Continued yen weakness, partly caused by rates that are still deeply negative in real terms, could also start to give inflation too much momentum, leaving the BOJ behind the curve in controlling it.<\/p>\n Nearly 60% of surveyed economists already think the central bank has fallen behind. It\u2019s a view shared by US Treasury Secretary Scott Bessent, who didn\u2019t miss a chance to again mention the need for \u201csound formulation and communication of monetary policy\u201d by Japan after a recent discussion of currency volatility with Finance Minister Satsuki Katayama in Washington.<\/p>\n While 68% of polled BOJ watchers see one rate hike every six months or so, a pace that would place the next move in June or July, three quarters see the yen as a risk that could hasten the next move.<\/p>\n That view appears to be gaining traction at the BOJ, too. While officials don\u2019t have a preset course for rates, further yen weakness that fuels inflation could prompt them to move earlier, according to people familiar with the matter.<\/p>\n One factor that appears to have dislodged the exchange rate is the emergence of Prime Minister Sanae Takaichi, a known critic of BOJ hiking. Her plan for a snap election as soon as next month has added to downward pressure on the yen, and market players are betting on a win that would giving her more room to spend freely and slow down BOJ normalization efforts.<\/p>\n<\/p><\/div>\n For Ueda, the early election is an unwanted distraction that will add to the difficulty of calibrating his post-meeting remarks to avoid a knee-jerk reaction in markets.<\/p>\n What Bloomberg Economics Says:<\/p>\n \u201cWe see the next hike in July. With Prime Minister Takaichi looking poised to call a snap election, we expect Governor Ueda to play his cards close, sticking to recent guidance to avoid inviting any unwanted attention. He\u2019ll probably bat down any questions on the yen, pointing out the government calls the shots on exchange rates.\u201d<\/p>\n \u2014Taro Kimura, senior economist. For full analysis, click here<\/p>\n Elsewhere, gross domestic product and price data in the US, purchasing manager indexes from around the world, UK inflation and a raft of Chinese numbers will be among the highlights. A packed week will also feature the World Economic Forum\u2019s annual meetings in the Swiss mountain resort of Davos.<\/p>\n Click here for what happened in the past week, and below is our wrap of what\u2019s coming up in the global economy.<\/p>\n US and Canada<\/p>\n The highlight of the upcoming holiday-shortened US trading week will be Thursday\u2019s report on personal income and spending, which also contains the Federal Reserve\u2019s preferred inflation metric.<\/p>\n The personal consumption expenditures price index, excluding food and energy, probably rose 0.2% in November from a month earlier, economists forecast. To fill in for data points missing from October data due to the record-long government shutdown, the Bureau of Economic Analysis said it will use the average of September and November data from the consumer price index.<\/p>\n The so-called core PCE price gauge is seen rising 2.8% from November of the previous year, still above the Fed\u2019s 2% goal. That reinforces the views of most US central bankers that the Fed should pause after three straight rate cuts.<\/p>\n Signs the fragile job market is stabilizing against a backdrop of steady economic growth are also factoring into expectations that the Fed has scope to wait and assess more data. Personal spending in November likely remained healthy, economists project.<\/p>\n Fed officials are on a break from public speaking ahead of their Jan. 27-28 policy meeting. Other data in the coming week include the last estimate of third-quarter gross domestic product, and the University of Michigan\u2019s final January consumer sentiment index.<\/p>\n Canadian inflation may have edged up in December from November\u2019s 2.2% because of a base-year effect from last year\u2019s goods and services tax holiday. Still, falling gasoline prices and easing rents should keep the result only modestly above the Bank of Canada\u2019s 2% target, and the release is unlikely to shift expectations of a policy rate holding steady at 2.25% for most of the year.<\/p>\n The central bank\u2019s business and consumer surveys will shed light on sentiment around inflation and jobs as a review of the North American trade deal approaches. November retail sales and a flash estimate for December will offer insight into household demand as US tariffs weigh on the economy.<\/p>\n Asia<\/p>\n Central banks take center stage in Asia, with the BOJ the marquee event and policy settings scheduled elsewhere in the region too.<\/p>\n Chinese banks are expected to hold loan prime rates steady on Tuesday. Indonesia\u2019s central bank meets on Wednesday, with rates widely expected to be kept at 4.75%.<\/p>\n Malaysia sets borrowing costs on Thursday, with the overnight policy rate also expected to be maintained, keeping the focus on guidance and how policymakers frame the external environment heading into the new year.<\/p>\n New economic data will fill in the contours of the growth picture once the policy dust settles. In China, in the wake of Thursday\u2019s signal that there\u2019s room for further easing, Monday\u2019s data dump \u2014 including fourth-quarter GDP, retail sales, industrial production and property indicators \u2014 will anchor the week. Taiwan publishes export orders on Tuesday, offering another read on the global electronics cycle.<\/p>\n Japan has trade figures on Thursday followed by CPI on Friday, ahead of the BOJ. In Australia, Thursday\u2019s jobs report is the key domestic input as investors gauge whether employment conditions are cooling cleanly or remain tight. Also on Thursday, South Korea publishes fourth-quarter GDP.<\/p>\n New Zealand\u2019s CPI report on Friday lands after aggressive rate cuts through 2025.<\/p>\n Rounding out the region, India\u2019s PMIs Friday offer a timely snapshot of momentum while a run of ASEAN data adds color on regional conditions: the Philippines releases balance-of-payments figures on Monday, Malaysia publishes CPI and trade on Tuesday, Thailand reports car sales during the week, and Singapore closes with CPI on Friday.<\/p>\n Europe, Middle East, Africa<\/p>\n Investors focused on the UK will see a blast of key data that may further shape rate expectations after a monthly GDP report showed a surprising rebound in growth during November.<\/p>\n Data on Tuesday may show a further slowing in wage increases, and jobs numbers will reveal how the labor market is holding up.<\/p>\n Reports the following day are expected to show a slight and probably temporary pickup in inflation, to 3.3% \u2014 noticeably above the Bank of England\u2019s 2% goal. Statistics on public finances and retail sales are scheduled for Thursday and Friday, respectively.<\/p>\n Testimony on financial stability to lawmakers by BOE officials including Governor Andrew Bailey is on the agenda for Wednesday.<\/p>\n Initial January PMI readings for the UK and the euro zone will come on Friday. Elsewhere in the currency region, a final assessment of inflation on Monday and consumer confidence on Thursday are due. <\/p>\n Within individual euro-area economies, Germany\u2019s ZEW investor confidence gauge on Tuesday and French business confidence on Friday may draw attention.<\/p>\n The European Central Bank will publish an account of its Dec. 17-18 meeting on Thursday. Davos will be the focus for policymaker comments, with three panel appearances by President Christine Lagarde on the schedule.<\/p>\n Also of interest for the ECB is the potential selection of a vice president to succeed Luis de Guindos later this year. Euro-zone ministers will discuss the matter on Monday.<\/p>\n Elsewhere, data on Wednesday will likely show South African inflation accelerated to 3.6% in December, still keeping the average for 2025 below the central bank\u2019s 3.3% forecast. Together with a stronger rand, that may give policymakers room to cut rates.<\/p>\n A trio of rate decisions is on the schedule:<\/p>\n Romania\u2019s central bank is expected to keep rates steady on Monday as it awaits firm evidence of easing price pressures after inflation ended 2025 close to 10%.<\/p>\n<\/li>\n Turkey is likely to cut borrowing costs on Thursday, with policymakers encouraged by slowing inflation. The rate is expected to drop to 36.5% from 38%, according to the median estimate of economists, sticking to a measured pace amid inflation risks.<\/p>\n<\/li>\n And Norway\u2019s central bank is widely expected to keep rates on hold for a third meeting the same day as underlying price pressures show no sign of easing. Officials may repeat an outlook for further cuts in borrowing costs \u201cin the course of\u201d 2026, anticipating lower inflation, and after growth proved weaker than expected.<\/p>\n<\/li>\n<\/ul>\n Latin America<\/p>\n The highlight of a busy week in Mexico is its mid-month consumer prices report, the final inflation gauge central bankers will see before their Feb. 5 policy meeting.<\/p>\n Most economists see the headline reading picking up slightly to remain above Banxico\u2019s 3% target but still inside the 2% to 4% tolerance range, with the core print continuing to run above the tolerance band.<\/p>\n Data in line with estimates should cinch the case for a Banxico rate pause next month after 12 straight cuts; policymakers had signaled as much in their December post-decision communique. Mexico will also be serve up retail sales and GDP-proxy data for November.<\/p>\n Colombia is slated to post November GDP-proxy data, retail sales, manufacturing and industrial output. All four indicators have been in the black since May on rising public-sector spending, leading some analysts to conclude that the economy is overheating.<\/p>\n In Argentina, GDP-proxy data for November may show more sputtering from South America\u2019s No. 2 economy after a negative month-on-month result in October. Davos-watchers can look forward to an appearance by the country\u2019s ever-colorful president, Javier Milei.<\/p>\n Paraguay\u2019s central bank in December kept its key rate at 6% for a 21st straight month. In the post-decision statement, the central bank pegged 2025 GDP growth at 6% with an inflation rate of 3.6%.<\/p>\n A little more than a week later, the December consumer prices report showed that the annual print in one of the region\u2019s fastest growing economies had declined to 3.1%, well below the bank\u2019s 2025 estimate. Policymakers take their first decision of the year on Friday.<\/p>\n –With assistance from Swati Pandey, Laura Dhillon Kane, Vince Golle, Monique Vanek, Robert Jameson, Simon Lee, Ott Ummelas and Carla Canivete.<\/p>\n Most Read from Bloomberg Businessweek<\/p>\n \u00a92026 Bloomberg L.P.<\/p>\n<\/p><\/div>\n<\/div>\n<\/div>
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