Key events of the week

As investors attempt to gauge how aggressively the Federal Reserve will fight inflation, this week's US jobs report will be a key focus for markets. Amid elevated market volatility, both the Bank of England and the European Central Bank will meet. As earnings season continues, Amazon and Alphabet are both scheduled to report earnings. Despite a modest rebound on Monday, global stocks are still headed for their worst January since 2016 after a brutal month. It sounds like a busy week for investors and banks while most Asian countries are celebrating the new year.

Bank of England rate meeting

At its upcoming policy meeting on Thursday, the BOE is expected to raise rates by another 0.25% to contain inflation, which is at its highest in thirty years.

As a result of last month's surprise policy statement by the Bank of England, the base rate increased from 0.1% to 0.25%. The Bank of England shifted its attitude after being strongly urged by the IMF to get on with it. Persisting inflation is another factor of matters for the BoE, with CPI rising to 5.4% and RPI to 7.5% in December. Both are higher than previous data. The Consumer price index (CPI) in the UK hit 5.1% in the 12 months to November, while the retail price index (RPI), which also includes housing costs, hit 7.1%, its highest level in 30 years.

Eurozone data, ECB meeting

Ahead of Thursday's ECB meeting, the Eurozone will release data on GDP and inflation for the fourth quarter. The GDP report is expected to show that economic growth slowed in the three months to December while inflation eased.

ECB rates are diverging from the Fed and BOE, with no sign of a rate hike imminent.

In the meantime, ECB head Christine Lagarde is challenging to communicate that policymakers are sticking to their hawkish stance on inflation while tamping down premature speculation on rate hikes.

Key US job report

US nonfarm payrolls will be released on Friday, with economists forecasting that the economy added 155,000 jobs in January, down from 199,000 in December due to the Omicron variant.

If the labour market continues to strengthen, it could add to bets on the Fed's aggressiveness in tightening monetary policy to combat inflation.

After last week's policy meeting, Jerome Powell hinted at a March rate hike and noted that officials may hike rates even faster than the four hikes already priced into markets for this year.