Australia:

Tue: RBA rates decision/media conference, NAB business confidence (Nov)

Thu: Employment/unemployment (Nov), CBA household spending

International

Mon: CN — international trade (Nov)

             US — Consumer inflation expectations (Nov)

Tue: US — Consumer inflation expectations (Nov)

Wed: CN — Consumer & producer price indexes

             US — Employment cost index

            CA — Bank of Canada rates decision

Thu: US — International trade balance (Sep)

It’s all about central banks and interest rates this week.

The RBA is almost unanimously expected to keep the cash rate on hold at 3.6% on Tuesday, a conviction that has only firmed since hotter-than-expected recent inflation data.

Given that economic growth has been gaining traction, many rate watchers have tossed their expectations of rate cuts next year overboard and are now forecasting that the next move from the RBA will be a hike.

Over at Westpac, chief economist and former RBA assistant governor Luci Ellis agrees the rates will remain on hold this week and well into the future, but she still has two rate cuts pencilled in for next year.

She hasn’t joined the chorus of Australia’s “tight supply capacity is inflationary” arguing that trend growth is higher than the RBA modelling.

“If we are right about supply capacity, inflation will moderate — at least in the market sector — over the course of 2026, leaving room for the two cuts we still have pencilled in (May and August as the base case),” Dr Ellis said.

“Given the RBA’s beliefs about potential output, this will not be its expectation. It might therefore seek to further dampen expectations of future cuts.”

So, the interest in the RBA’s decision will not be the decision itself, rather the communication that follows.

If the RBA hold is a lock on Tuesday, then a cut from US Federal Reserve is almost as certain.

Despite a lack of up-to-date economic data at their disposal, much of the recent commentary from senior Fed figures has tended to lean towards a cut.

That’s certainly how the market has read it.

RBC’s senior US economist Mike Reid describes the Fed voting members as being “extremely divided” but believes there will be a cut — a “hawkish” one.

“We expect that the Fed will opt not to surprise the market and will opt for the path of least resistance — with a 25-basis point cut — lowering the Fed Funds rate to 3.50-3.75%,” Mr Reid wrote in a note to clients over the weekend.

On the data front, the ABS publishes November labour force figures on Thursday.

The consensus view is that about 20,000 jobs were created last month, while unemployment may edge up to 4.4%. That wouldn’t be much of a surprise, as a rounding error effectively kept it at 4.3% in October.