Economic news from the U.S. will dominate during the third week of September.

Reports from both National Bank and Scotiabank say the headline event will be the Federal Reserve’s September 20 rate announcement. Along with a summary of economic projections, Fed Chair Yellen will take part in a press conference.

But, as of Monday at 7:35 CT, CME Group’s FedWatch Tool indicated the market is overwhelmingly expecting the Fed to stand pat.

Read: Fed Chair Yellen’s fate still hangs in the balance

The Fed’s main focus may be on how it plans to unwind its balance sheet, says Derek Holt, vice-president and head of Capital Markets Economics at Scotiabank. But, he adds, “I continue to think that the bias among FOMC officials to rely upon the rate equivalent effect of balance sheet reduction in lieu of further policy rate changes is misplaced.”

In its report, National Bank predicts the Fed “keep the upper band of the fed funds rate unchanged for now at 1.25%.” Why? Inflation remains “soft and below target,” and there are “uncertainties with regards to the economic impacts of hurricanes Harvey and Irma.”

Still, National Bank also expects the Federal Open Market Committee to “announce the start of balance sheet normalization, while reminding markets that it leaves the door open for further interest rate hikes before year end.”

Read: Experts weigh in on U.S. rates, Fed chair and tax reform

What to watch in Canada

On the domestic front, we’ll get a speech on Monday by Bank of Canada Deputy Governor Tim Lane on international trade.

Also on the calendar is the release of manufacturing sales, wholesale trade and retail sales data. Says Holt: “Friday’s July report will be parsed for slowing evidence. Just like the previous report and the one before that. In fact, just like the past several quarters.” The market will likely use this data to try and time the next BoC hike, he adds, noting that “the path to the next move will be informed by BoC speak and data over the coming week.”

Reflecting on recent rhetoric about the central bank’s communication style, Holt says, “The BoC said all that it needed to in June with the speech by Senior Deputy Governor Wilkins and interviews by Governor Poloz, plus the July MPR and press conference. Economists should not have needed to be hit over the head with the same hammer in the lead-up to the September meeting.”

Read: What Canada’s hot streak means for interest rates

For its part, National Bank predicts manufacturing shipments will have fallen for a second consecutive month and that retail sales growth “may have been restrained in light of reports of slumping auto sales during July.”

It adds, “August data is likely to show the consumer price index rising in synch with higher energy prices, pushing up the annual headline inflation rate to 1.5%. Similarly, the year-on-year core CPI […] should continue to rise with a strengthening economy, likely hitting an 11-month high of 1.5% in August.”

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