Tuesday’s decision of the Federal Open Market Committee is anxiously expected by the market. The market expects an interest rate cut by 25 basis points to 4.25% but there are voices about an even 50 basis points decrease. Such move is expected to lift the American economy, which has been slowing down in the recent quarter. The US Gross Domestic Product can fall even below 1.5% in the fourth quarter of 2007.

The world’s attention is focused on the US but the rest of the week will also bring interesting macroeconomic information. On Wednesday, Canada and the US will report their Trade Balance. Investors betting on oil will closely watch the crude oil inventories report, which can affect the oil market. Last week the market did not react strongly to the decrease in inventories but other factors (weakening USD) caused price declines.

On Thursday the Swiss central bank will make its interest rate statement. The market does not expect a change from the current 2.75%. More attention will brought on the US core retail sales and the PPI report. Producer’s inflation is expected to increase from the previous 0.2% all the way to 1.6%. On Friday, more inflation reports are expected. In the Euro zone, CPI is forecasted to remain at 0.5%. For investors more important will be the US reports, with CPI jumping to a forecasted 0.6% (prior: 0.3%) and core CPI staying at 0.2%. Also, industrial production in the US will be reported (forecast: 0.1%; prior: -0.5%).

Investors in Poland will finally get some macroeconomic publications from the local market. On Wednesday we will get the Polish current account. More important for the market and further monetary policy of the Monetary Policy Council will be Thursday’s CPI report. Inflation in Poland is forecasted to increase to 3.5%, the highest level the central bank agrees on. It seems that further interest rates hike in Poland are just a question of time.

Adam Narczewski