The five most important economic events this week

Suppose the PMIs show that improving business conditions contribute to upward price pressure. This could reinforce expectations that the European Central Bank will continue to raise interest rates, given persistently high inflation and a weak economy.

The most important economic reading in the Eurozone will be on Tuesday, February 21. That’s when data on purchasing managers’ indices (PMI) will become public. This is a new indicator that has risen significantly in the past few years among official statisticians in the EU and the US. The data shows how the economy is performing.

Suppose the PMIs show that improving business conditions contribute to upward price pressure. This could reinforce expectations that the European Central Bank will continue to raise interest rates, given persistently high inflation.

At the same time, on Wednesday, the German Ifo Institute will announce statistics on how the largest economy in the Eurozone is coping with the energy crisis. Economists expect signs of recovery to continue at low levels.

Finally, on Thursday, Eurostat will release the final inflation data for January. It will be in focus after delayed German data was left out of the original estimate. The outcomes of these announcements will likely influence the direction of the ECB’s monetary policy for at least the next month.

The next Fed meeting awaited

On the other side of the Atlantic Ocean, personal income and consumption data will come out on Friday. It will include the US central bank’s favorite gauge of inflation – the core personal consumption price index. The US economic calendar also includes an update on January’s home sales, revised fourth-quarter gross domestic product data, and the weekly unemployment report.

Similar to the case of the EU, such statistical information has the potential to shake the market, and the Fed officials. Hence, if there are large movements versus earlier forecasts, there may be new monetary tightening. The next meeting of Fed governors to decide on the level of interest rates will be on March 21-22.