Goodbye Draghi as Lagarde Era Nears for ECB: Global Economy Week

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It’s time to say goodbye to European Central Bank President Mario Draghi, as he oversees his final monetary policy meeting this week before his term ends on Oct. 31.

Thursday’s gathering of the Governing Council may prove an anticlimax after the recent stimulus injection by policy makers and the verbal fireworks it provoked as they subsequently squabbled over its merits. Details and calibration of that package of measures, further calls for fiscal help and valedictory remarks may provide the key headlines.

Draghi will be succeeded by Christine Lagarde, though the change of leadership isn’t likely to shift the ECB’s policy stance. A Bloomberg survey of economists showed Friday that the latest initiative is likely locked in for the next three years -- with most respondents saying there won’t be an interest-rate hike until late 2022.

Here’s what happened last week and below is our weekly wrap of what’s going on in the world economy this week.

U.S. and Canada

Investors will be looking to see more positive developments in the U.S.-China trade discussions. Federal Reserve officials are in blackout ahead of their Oct. 30 meeting. Instead, economists will be parsing home sales data on Tuesday and Wednesday as well as Thursday’s durable goods report.

Canadian voters pick a government on Oct. 21st with a fragmented parliament likely. The Bank of Canada releases its business outlook survey the next day.

• For more, read Bloomberg Economics full Week Ahead for the U.S

Europe, Middle East and Africa

In the U.K., Bank of England Governor Mark Carney is due to speak at a conference of finance professionals on Tuesday, an appearance that could take on heightened significance after the U.K. struck a Brexit deal with the European Union.

Turkey’s central bank will make an interest-rate decision on Oct. 24, in the midst of a military operation in Syria that has drawn sanctions and threats from U.S. President Donald Trump to “obliterate” Turkey’s economy. The institution slashed a cumulative 750 basis points off its main rate in the last two meetings, but Governor Murat Uysal has signaled that he might look to moderate the pace of easing. Russia follows with a rate meeting the following day, when it’s expected to cut by 25 basis points. Inflation headed below the Russian central bank’s 4% target is prompting calls for more cuts, faster.

Monetary policy makers in Hungary, Sweden, Norway and the Ukraine also set interest rates although none are expected to shift their benchmarks. Sweden may though signal it intends to postpone a hike until later in the year.

• For more, read Bloomberg Economics’ full Week Ahead for EMEA

Asia

Indonesia’s central bank will meet Thursday to decide on rates. So far, economists are split on whether it’ll make another cut after three straight reductions aimed at bolstering economic growth. After Friday’s lackluster data in China, a politburo meeting is possible and may signal a shift in stimulus policy or, more likely, continuation of low-level stimulus. Policy makers have so far avoided the kind of big-bang spending of past slowdowns as they try to keep a lid on debt growth and financial risks. South Korea will publish GDP numbers for the third quarter on Thursday, providing an insight into how export-reliant economies are faring amid the trade war.

• For more, read Bloomberg Economics’ full Week Ahead for Asia

Latin America

Brazil and Mexico will publish mid-October price indexes on Tuesday and Thursday, respectively, that are expected to show annual inflation hovering around 3%, a pace slow enough to allow for additional interest rate cuts in both countries. Meanwhile, on Wednesday, the Chilean central bank is forecast to deliver its third interest rate cut in five months amid sputtering growth and docile inflation.

• For more, read Bloomberg Economics’ full Week Ahead for Latin America

To contact the reporter on this story: Simon Kennedy in London at skennedy4@bloomberg.net

To contact the editors responsible for this story: Stephanie Flanders at flanders@bloomberg.net, Craig Stirling, Brian Swint

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