Federal Reserve (Fed) Bank of Atlanta president Raphael Bostic said he expects the US economy to slow this year but to remain robust, adding that the downward path for inflation could see some bumps.

Bostic said he projects gross domestic product growth to be about 2% in 2025 as households spend down their savings. Growth is on track for about 2.6% this year.

The Atlanta Fed chief added that he expects the Fed’s benchmark rate to drop to about 3% to 3.5% in the long run, but the timing for reaching that level is uncertain. It is currently in a range of 4.75% to 5%.

“The question everybody asks us is ‘how fast?’ I think it depends on what happens in the labour market and what happens with inflation,” Bostic said on Tuesday during a moderated conversation in Atlanta. “I actually think we are going to see inflation be choppy, and I expect that we will see employment stay robust.”

Fed officials lowered borrowing costs by a half percentage point last month, a larger-than-typical move meant to protect the strength of the economy. 

A robust jobs report and a stronger-than-expected inflation reading for September have prompted several policymakers to say the US central bank should move at a more incremental pace with future rate cuts.

Bostic said last week he was open to leaving rates steady at one of the Fed’s two remaining meetings this year if data support that approach. He repeated on Tuesday that he had pencilled in one more quarter-point rate cut for this year at last month’s meeting, but that the final path for rates would depend on the economy. 

Source: The edge markets

Canada September CPI

The United Kingdom’s (UK) Office for National Statistics (ONS) will release the highly anticipated Consumer Price Index (CPI) data for September on Wednesday at 06:00 GMT.

The UK CPI inflation report could affirm expectations of 25 basis points (bps) interest-rate cut by the Bank of England (BoE) in November, injecting a fresh bout of volatility into the Pound Sterling.

What to expect from the next UK inflation report?

The UK annual Consumer Price Index is likely to increase by 1.9% in September, sharply slowing down from August’s 2.2% growth while moving back below the BoE’s 2.0% target.

The core CPI inflation is set to ease to 3.4% YoY in September from 3.6% in August.

Official data is expected to show that services inflation fell to 5.2% in September from 5.6% the prior month, according to a Bloomberg survey of economists.

The BoE projected the annual headline CPI at 2.1% and services CPI at 5.5% for September.

Meanwhile, the British monthly CPI is seen rising 0.2% in the same period, as against the previous increase of 0.3%.

Previewing the UK inflation data, TD Securities (TDS) analysts noted: “We look for UK inflation to continue its steady march downward. But rapidly falling energy prices still heavily distort the headline number, and services inflation is likely to remain above 5.0% YoY (TDS: 5.2%, mkt: 5.3%), leaving core well above a range the MPC is comfortable with.”

“Hotel and airfare prices remain key sources of volatility in the month,” the TDS analysts said.

How will the UK Consumer Price Index report affect GBP/USD?

Heading into the UK CPI event risk, Pound Sterling traders weigh in on the odds of the BoE rate cut next month, especially after the contradictory messages from BoE policymakers earlier in October.

BoE Chief Economist Huw Pill said that there is “ample reason for caution in assessing the dissipation of inflation persistence,” adding that the “need for such caution points to a gradual withdrawal of monetary policy restriction.” Just a day before Pill’s appearance, Governor Andrew Bailey noted that the UK central bank “could become a bit more activist on rate cuts if there’s further good news on inflation.”

Therefore, the UK CPI data could help confirm whether the BoE will resume its rate-cutting cycle after pausing in September.

An upside surprise to the headline and core inflation data would likely douse the market’s expectations of a rate cut next month, lifting the Pound Sterling. In such a case, GBP/USD could stage a decisive comeback from multi-week troughs.

Conversely, the GBP/USD downtrend could extend if the UK CPI readings meet forecasts or come in softer-than-expectations. Thus, the UK central bank’s progress on disinflation could confirm another rate reduction in November, throwing the British Pound under the bus.

Dhwani Mehta, Asian Session Lead Analyst at FXStreet, offers a brief technical outlook for the major and explains: “GBP/USD has entered a downside consolidative mode in the countdown to the UK CPI data release. The 14-day Relative Strength Index (RSI) holds near 40, suggesting that more losses remain in the offing.”

Dhwani adds: “The pair needs to find acceptance above the 50-day Simple Moving Average (SMA) at 1.3115 on a daily closing basis to negate the near-term bearish bias. The next upside targets are seen at the October 4 high at 1.3175 and the 21-day SMA at 1.3215. Alternatively, the immediate support is aligned at the 100-day SMA at 1.2950, below which the March 8 high of 1.2894 could be tested.”

Source: FXSTREET

Republican presidential candidate Donald Trump defended his plans to overhaul the US economy through dramatic tariff increases and more direct consultation with the Federal Reserve, arguing that his policies would result in substantial growth despite projections that his agenda would fuel inflation and spike the national debt.

“It’s going to have a massive effect, positive effect,” Trump told Bloomberg News Editor-in-Chief John Micklethwait on Tuesday in an interview at the Economic Club of Chicago.

Throughout the hour-long exchange, Trump repeatedly dismissed predictions by economists that his policies would have a net-negative impact on the economy and pass costs onto US consumers.

The former president shrugged off the possibility that his proposed tariffs might disrupt supply chains or squeeze small businesses, saying companies would rapidly return manufacturing to the US to avoid the levies. He argued that the impact of his plans to deport millions of undocumented migrants would be offset by legal migration. And, he said, his leadership would inspire loyalty rather than anger from allies.

“We’re all about growth,” Trump said. “We’re going to bring companies back to our country.”

The Republican nominee’s claims were warmly received by attendees at the event, who cheered his argument that dramatically increasing tariffs on foreign goods would protect “the companies that we have here and the new companies that will move in.”

The room was packed with about 600 people and a sizable contingent of Trump staffers. Executives in the room included Ashley Duchossois, chair of Duchossois Capital Management, the Chicago-based dynasty that’s known for its ties to the Churchill Downs racetrack and traditionally votes Republican. Carole Brown, Chicago’s former chief financial officer under then-Mayor Rahm Emanuel, attended as a member of the club.

Pat Greco, wearing a red hat with Trump’s “Make America Great Again” slogan and a dark suit, stood out in the ballroom. The 32-year-old corporate attorney said it was his first Trump event, though he had met the former president once before.

“I was shocked he was coming, to be honest,” Greco said before Trump started speaking.

Trump is banking on a similar reception from voters, who are already casting their ballots in what polls forecast to be a razor-thin contest with Democratic Vice President Kamala Harris three weeks before Election Day.

Federal Reserve

Trump indicated he would pursue many of the norm-smashing tactics of his first term were he returned to the Oval Office, including seeking greater influence at the Federal Reserve.

While the former president sidestepped a question about whether he would seek to remove Fed Chairman Jerome Powell, he said it was fair game for a president to tell the central bank’s chief how he thinks interest rates should change.

“If you’re a very good president with good sense, you should be able to at least talk to him,” Trump said, adding that he did not believe a president should be able to mandate change.

Trump also mocked the job of running the Fed.

“It’s the greatest job in government,” Trump said. “You show up to the office once a month and you say, ‘let’s say flip a coin’ and everybody talks about you like you’re a God.”

Federal Deficit

Trump also dismissed concerns over the federal deficit, long a focus of Republican presidential campaigns, arguing without evidence that the totality of his economic platform would outpace the cost to taxpayers.

The former president has vowed to carry out an aggressive campaign of deregulation, renew expiring tax cuts, lower the corporate tax rate to 15% from 21%, and offer fresh tax reductions and benefits to bolster domestic manufacturing — policies cheered by prominent Wall Street and corporate leaders.

But the proposals would cost trillions of dollars and threaten to worsen a US federal deficit that’s already historically large. Some investors are betting Trump’s policies will leave the US saddled with more debt and higher inflation and interest rates. America’s annual deficit is already close to $2 trillion.

Trump has sought to offset some of those costs by threatening across-the-board tariffs, which he aims to impose on both US allies and adversaries, including a 60% levy on imports from China and 10% duties on the rest of the world.

Trump said the tariffs would help “tremendously” in preventing China and other countries from flooding the US with products that threatened key industries, like the auto sector.

But economists say tariffs are unlikely to create the revenue he needs. The Peterson Institute for International Economics estimates the tariffs could raise over $200 billion a year. The US took in an estimated $4.9 trillion in revenue in fiscal 2024.

Trump dismissed those projections, saying doubters were simply “wrong” about the impact of tariffs.

“We will grow,” he said. “The only way you can do it is through the threat of tariffs.”

Unproven Assertions

Occasionally testy exchanges included many of the unproven assertions or falsehoods that have peppered Trump’s campaign events, from inaccurate claims about the number of undocumented migrants who have been convicted of murder to claiming fraud was to blame for his defeat in the 2020 election to President Joe Biden.

On migration, Trump acknowledged the concerns of business owners worried his proposed immigration raids could shrink the labor supply, but indicated he would replace those migrants with people coming into the country legally.

“I want a lot of people to come into our country but I want them to come in legally,” Trump said.

During his first term, Trump proposed immigration policies that would have reduced the number of immigrants entering the country and prioritized high-skill workers, which economists warned could impact industries currently reliant on migrant labor.

Capitol assault

US Steel, Google

Trump-Putin relationship

Source: The edge markets

Three of Southeast Asia’s biggest economies will unveil monetary policy decisions from 3pm Malaysian time on Wednesday, influenced by everything from politics, inflation and currency volatility to geopolitical risks.

Bank Indonesia last month surprised markets with an early rate cut, but recent rupiah weakness means a majority of analysts expect officials to hold. The Philippine central bank has strongly flagged it will keep lowering rates. And the Bank of Thailand (BOT) is expected to continue defying government calls to cut borrowing costs, despite weak growth and inflation that’s below the bottom of its target range.

All three nations are highly sensitive to the health of the global economy. But they are also diverse: Indonesia has clout in commodities; Thailand has large tourism and manufacturing sectors; and the Philippines is home to a vast outsourcing industry serving global companies. The general consensus is for policymakers to hold or cut on Wednesday, with rate hikes virtually off the table

Indonesia

Bank Indonesia will keep the benchmark rate at 6%, according to 30 of 41 economists in a Bloomberg News survey, with the rest expecting another 25-basis-point cut. Bloomberg Economics is one of those seeing a quarter point as possible.

In September, policymakers in Southeast Asia’s biggest economy embarked on an easing cycle ahead of the US Federal Reserve’s (Fed) move. But renewed market volatility, fuelled by weaker US economic data and Middle East tensions, may lead emerging markets to be more cautious in moving lower. The rupiah has dropped more than 2% against the dollar this month, forcing the central bank to intervene in markets for the first time in months.

So policymakers led by governor Perry Warjiyo may hold this month and ease later in the quarter, according to DBS Bank economist Radhika Rao. “It will be a close call,” she said.

In general, the central bank is unlikely to reverse its easing stance. Low inflation and subdued consumption support the case for further rate cuts to help domestic demand, said Brian Lee, an economist at Maybank Securities Pte Ltd, who expects rate cuts to be deferred to November and December.

With near record-high foreign exchange reserves, Bank Indonesia may rely more on market intervention to stem any further rupiah declines. It may also need to keep the yields on its rupiah-denominated securities attractive to lure enough foreign inflows to keep the currency stable.

Philippines

Bangko Sentral ng Pilipinas (BSP) governor Eli Remolona told Bloomberg News earlier this month that he expects quarter-point cuts at each meeting, for a total 175-basis-point reduction by the end of 2025.

Inflation fell to its lowest in four years in September, thanks to slower increases in the prices of rice and other food items. Some 24 of 26 economists in a Bloomberg survey expect BSP to cut its target reverse repurchase rate by 25 basis points to 6%, the lowest since February 2023.

“What can make BSP step back from sustained rate cuts are the risks of worsening global oil prices and if the Fed slows on easing,” said Angelo Taningco, the chief economist and head of research at Security Bank Corp, adding that he expects both BSP and the Fed to make two 25-basis-point cuts this quarter and another 100 basis points next year.

The Philippine peso has fallen about 4% against the US dollar this year, but recent foreign flows into the local stock market have limited losses. The relatively stable currency and tepid economic growth are other reasons for BSP to continue to ease. It lowered the reserve requirement ratio to 7% for big lenders, pulling another lever to support the economy.

Thailand

Thailand’s Monetary Policy Committee (MPC) will likely resist the government’s rate cut calls once again and keep its benchmark interest rate unchanged at 2.5%, the highest level since 2013, for the sixth straight time, according to 22 of 27 economists surveyed by Bloomberg. Five predict a quarter of a percentage point cut.

“Financial stability and high levels of household debt have been the cornerstone of the MPC’s decision making until now, helping it push back on government’s and financial markets’ calls for easing,” said Shreya Sodhani, a regional economist at Barclays plc, who expects the central bank to stand pat this year. “The MPC now needs to walk a fine line to balance the trade-off between financial stability and its impact on growth.”

Still, many economists including Standard Chartered plc see a growing possibility of a cut either at this meeting or the next, given a slew of factors including the subdued growth outlook, below-target inflation, and political and private sector pressure. Deputy Finance Minister Paopoom Rojanasakul said earlier this month a 25-basis-point cut would be a good start, adding he thinks the central bank will cut rates this year.

Thai Chamber of Commerce chairman Sanan Angubolkul said on Oct 9 that lower borrowing costs would help businesses grappling with high expenses and a strong baht. The local currency gained 14% in the third quarter, making the nation’s exports more expensive compared to competitors.

The government is separately pushing to raise the 2025 inflation target from the 1% to 3% range to 1.5% to 3.5%, people familiar have said. There has also been manoeuvring to place Kittiratt Na-Ranong, a critic of the BOT’s hawkish monetary policy and a ruling party loyalist, in the key role of chairman, which could add pressure on governor Sethaput Suthiwartnarueput. 

The governor underscored the importance of independence in setting monetary policy last month. He also said decisions will be guided by the outlook for domestic economic and financial conditions and inflation. One of his predecessors, Tarisa Watanagase, warned that government meddling could have “disastrous consequences” for Southeast Asia’s second-biggest economy. 

Source: The edge markets

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