What to watch (1/2)

A busy day ahead highlighted by US CPI, the Riksbank meeting and a speech by BOE Governor Bailey while we also hear from ECB's de Guindos, Villeroy and Lane. Comments from the ECB speakers will be particularly in focus given a Bloomberg ECB sources story overnight that stated that a "growing number of European Central Bank policy makers are losing faith in the institution’s current inflation forecasting, emboldening their shift toward hiking interest rates later this year."

• Riksbank meeting: The Riksbank meeting at 8:30GMT/9:30CET with a press conference at 10:00GMT will be the early highlight. The focus will be on whether QE reinvestments are scaled back (through slowing/stopping reinvestments of covered/corporate bonds) and the repo rate path. The MNI Markets team thinks the QE decision is finely balanced, but looks for the repo rate path to be revised higher, probably more than most analyst forecasts, but less than the SEB survey of market participants expects. See the MNI Riksbank preview here.
• US CPI: Consensus for January’s inflation report is for a modest moderation after a strong December, with the median seeing core CPI at +0.5% M/M (average 0.45%) after 0.55% M/M. Core inflation was previously led by surging core goods (+1.9% M/M) as core services plateaued, with both categories expected to ease this month. Headline is seen at +0.4% M/M with a similar pace in energy inflation. These sequential rates would push headline up 0.3pps to 7.3% Y/Y and core up +0.4pps to 5.9% Y/Y, the highest since 1982. Alongside payrolls, US CPI is the biggest market-moving data point globally at present, so will potentially have far reaching implications for markets today. See the MNI preview here.