US Holds Rates Amid Key Data; Norway Eyes Unemployment
Markets Await Crucial Economic Indicators as Fed Stays Course
The U.S. Federal Reserve is anticipated to maintain its current interest rate policy, pausing before the release of significant monthly economic figures. Closer to home, Norway’s financial focus is locked on upcoming employment and retail sales data.
Norway’s Economic Pulse
Unlike its U.S. counterpart, Norges Bank will not issue an interest rate decision this month. Chief economist at Handelsbanken, **Karine Alson Nelson**, highlights this week’s unemployment figures and Tuesday’s retail data as particularly influential.
“Unemployment is expected to reach 2.1 percent, in line with Norges Bank’s expectations. It is a stable development,” **Alson Nelson** told E24. “And as long as unemployment stays low and stable, Norges Bank will not have any haste.” The central bank’s next rate meeting is scheduled for mid-August.
Looking Ahead to Autumn
Norges Bank’s June forecasts predict unemployment remaining at 2.1 percent through September, with a slight increase to approximately 2.2 percent as the workforce expands faster than job creation. This scenario would return unemployment to pre-pandemic levels.
“The fact that unemployment rose last month probably contributed to a surprising cut in June,” **Nelson** stated. “But the central bank will gradually go down to the inflation target, without rising labor. We think, like most others, that the next cut will come in September. But then it holds for this year.”
Key Economic Events This Week
Monday, July 28: China’s industrial figures, quarterly earnings from Heineken and McDonald’s.
Tuesday, July 29: Retail sales data for Norway, quarterly reports from Spotify and Boeing.
Wednesday, July 30: U.S. Federal Reserve interest rate decision, eurozone unemployment figures, inflation data from Australia and Spain, Canadian interest rate decision, and quarterly results from Meta, Microsoft, Ford, and Airbus.
Thursday, July 31: U.S. PCE inflation data, Japan’s central bank interest rate decision, currency flows from Norges Bank, and quarterly earnings from Subsea 7 and Apple.
Friday, August 1: U.S. Nonfarm Payrolls report, **Donald Trump**’s postponed tariff deadline, PMI and unemployment data from Japan, NAV’s working unemployment figures, PMI figures from China and Canada, and earnings from Chevron.
Consumption Trends Remain Positive
**Alson Nelson** anticipates a minor dip in retail sales figures but emphasizes the positive overall trend in Norwegian consumption. “There is a positive trend in consumption in general, and when we also got a cut in June, and are sure that more will come, it will help to lift the numbers going forward,” she explained.
The psychological impact of the June interest rate reduction is expected to continue supporting consumer sentiment through the summer and autumn months.
U.S. Economic Watch: Inflation and Jobs
Following his second inauguration in January, **Donald Trump**’s administration continues to generate significant economic news. A major trade agreement between the U.S. and the EU was announced recently.
Crucially, the U.S. will release its Nonfarm Payrolls report on Friday, a key indicator often dubbed “the most important figures of the month.” The consensus forecasts suggest weaker job growth compared to the previous month, with around 110,000 new jobs, and a slight increase in unemployment.
On Wednesday, Fed Chair **Jerome Powell** is set to announce the Federal Reserve’s interest rate decision. Market expectations, reflected by the CME FedWatch Tool, overwhelmingly favor keeping rates steady within the 4.25% to 4.50% range, with a 95.9% probability of no change.
As **Alson** noted, “**Trump** has been clearly on what he wants. Some of the Fed members have reported that a cut may come in July, but the majority probably believes in a more cautious approach. The labor market has stayed better than expected, and there is no great need to cut now.”
Inflationary Pressures and Trade Impacts
A significant “X-Factor” remains **Trump**’s trade policies, which are predicted to fuel inflation. “These are expected to give more inflation, and you see certain characters already,” **Alsvik Nelson** observed. The performance of the dollar also adds complexity. “But until the Fed sees greater effects of the customs, they will probably be careful,” she added.
“If the labor market weakens more than expected, it can be a shorter way to interest rate cuts in the future,” **Nelson** explained. “If the inflation and unemployment go in each direction, they get a little to think about.”
Thursday’s release of U.S. Personal Consumption Expenditures (PCE) inflation data is also a critical focus for the Fed. In May, inflation stood at 2.3%, with core inflation at 2.7%, both exceeding the Federal Reserve’s 2% target.
The June figures are anticipated to be slightly higher, with stronger growth than the Consumer Price Index (CPI) reported at 2.7%. Major corporations such as Meta and Microsoft are also scheduled to release their earnings reports this week.
