All eyes will be on the Federal Reserve this week, with interest rates expected to be cut. The central banks of Canada, England and Japan will also release their latest policy statements. Meanwhile, U.S. retail sales growth is expected to slow in August, while the transportation group and economic barometer FedEx will release its latest quarterly results.

**1. Fed decision in focus**

The Fed will be in focus this week, with markets all but certain that the central bank will cut interest rates at the end of its two-day meeting on Wednesday.

Buoyed by signs of a softening U.S. labor market, policymakers are expected to back the first rate cut since the easing cycle was paused in December. A rate cut could theoretically help spur investment and hiring.

However, a cut could also raise inflation pressures. The monthly U.S. consumer price index picked up slightly last week, driven by rising housing and food costs, a potential sign of persistent inflation. However, a separate indicator showing a rise in weekly initial jobless claims likely kept the Fed on course for a rate cut. According to CME’s FedWatch Tool, there is currently about a 95% chance of a 25 basis point cut in borrowing costs, with about a 5% chance of a deeper cut of half a percentage point. The Fed’s target rate is currently between 4.25% and 4.5%.

“Inflation remains above target and tariffs are likely to keep it elevated in the near term, but the balance of risks is skewed toward the need for more support for the economy,” ING analysts said in a note.

**2. BoC, BOE, BOJ decisions ahead**

In addition to the Fed, interest rate decisions are also due from a host of other central banks around the world.

The Bank of Canada is expected to cut rates by a quarter point to support an economy particularly vulnerable to U.S. President Donald Trump’s massive tariffs. Canada’s labor market slowed for a second straight month in August and the overall economy contracted sharply in the second quarter, although inflation was not much different from analysts’ expectations.

Bank of England officials are expected to leave borrowing costs unchanged. The Bank of England, which will also have a chance to assess employment and inflation data before making a decision on Thursday, previously cut rates in August.

Analysts also expect the Bank of Japan to keep rates steady, although investors may want to watch for any hints about policymakers’ plans for the fourth quarter amid broader domestic political uncertainty.

**3. U.S. Retail Sales**

The economic calendar on Tuesday includes U.S. retail sales data for August.

Economists forecast that retail sales growth slowed to 0.2% last month. In July, it was 0.5%, helped by robust demand for autos and promotions from e-commerce giant Amazon.com and big-box retailer Walmart.

June’s sales figures were also revised up, offering some hope that economic activity has weathered a slowdown in the broader labor market.

However, the outlook for an easing employment situation, coupled with signs of weakening consumer confidence and rising commodity prices, are possible headwinds for sales in the final weeks of the third quarter.

**4. FedEx report**

FedEx will be among the headlines on the earnings agenda this week, with the U.S. transportation group seen as a proxy for consumer spending.

Because FedEx is considered an economic barometer because it is connected to virtually every type of company around the world, its numbers are often closely watched for signs of early business trends.

Trump’s aggressive trade policies were a focus of FedEx’s most recent quarterly results, as White House tariffs contributed to heightened economic uncertainty, leading many firms to cut spending.

FedEx offered a cautious outlook in June, which was prompted by the fees. The company declined to disclose full-year revenue or earnings guidance, and CEO Raj Subramaniam warned of “volatile” global demand conditions.

Memphis-based FedEx’s fiscal first-quarter guidance for adjusted earnings per share of $3.40 to $4 also missed analyst expectations.

**5. US-China talks**

US and Chinese officials are set to meet again after reportedly making little progress on the first day of a new round of discussions on Sunday.

Expectations for the Madrid talks were muted, particularly for a breakthrough in long-running trade tensions between the world's two largest economies.

Instead, observers expect the talks to end with an extension of a deadline for short-video app TikTok, which is owned by China's ByteDance, to sell its US operations. As it stands, if ByteDance fails to sell the unit by Sept. 17, TikTok faces closure in the US.

Citing a source familiar with the matter, Reuters reported that President Donald Trump is likely to extend the deadline.

Bessent told reporters the two sides would "start all over again in the morning" after meeting for just six hours on Sunday. Meanwhile, the Chinese embassy in Madrid told reporters that a final press conference could be held on Monday, suggesting the talks could wrap up soon. Bessent is due to travel to London on Tuesday, ahead of Trump's state visit to King Charles later this week. Elsewhere, ahead of the talks in Spain, China's Commerce Ministry opened an anti-discrimination investigation into US chip trade policies and a separate probe into alleged dumping of US analogue chips.