Data scrutiny to destroy case for policy tightening

The latest communications from advanced economy central banks imply that they have shifted away from a normalisation path towards closely monitoring incoming data to ascertain whether additional policy stimulus might be needed. Here, we outline the data that each central bank is likely to watch most closely in the months ahead. We suspect that those data will support the case for interest rate cuts by the Federal Reserve next year. Meanwhile, the evidence before the ECB and the Bank of Japan is likely to convince them that, at the very least, the current ultra-loose policy stance should be sustained.