I’d say the size of the first Fed rate cut will be decided this week, except that I said that last week and it turned out to be wrong. “Fool me once,” as they say.

Instead, I’ll just offer the banal observation that Wednesday’s US inflation update has the potential to tip the scales for or against a half-point move at the September FOMC meeting which, following an inconclusive jobs report, is still a toss up between a “regular” 25bps cut and a “super-size” 50bps move.

As discussed in the latest Weekly, the argument for going with 50bps is, in my view, stronger than the case for starting with a quarter-point reduction. Alas, I’m not consulted on these decisions. (Although at least a couple of people who are consulted stumble occasionally onto these hallowed pages, bless their hearts.)

The CPI update will probably show core price growth ran at 0.2% last month versus July, and 3.2% YoY.

Obviously, an overshoot would bias the Fed towards a 25bps first cut, while an in-line print would leave the door open to 50.

If you’re in the camp hoping for a larger move from Jerome Powell, you really need a constructive read on shelter inflation and, ideally, a benign update on CPI-derived “supercore” inflation (i.e., services inflation stripping out food, housing and energy or, colloquially, services inflation “ex-what you need to survive.”)

The Fed will also eye PPI on Thursday and the expectations gauges in the preliminary read on University of Michigan sentiment for September, due Friday. Also, it’s worth noting that the Committee will see August retail sales the day before this month’s policy decision. But barring a big surprise from the CPI release on September 11, the size of the first cut will be a judgment call. You can make the case for 25 and you can make the case for 50. There will be a debate, and much as Powell will try to foster consensus, he might get a dissent.

Officials are in the pre-meeting communications blackout, but I doubt they’ll leave the market flying completely blind. At some point following the CPI readout, expect Nick Timiraos to tip the Fed’s hand on the likely size of September 18’s cut. And no, I’m not joking. Market pricing won’t have the meeting at a coin toss on the morning of September 18. That’s not the way the Fed operates in modernity.

Meanwhile, the ECB will deliver the second rate cut of the cycle this week. Headline inflation across the pond ran at 2.2% last month and core price growth has sported a two-handle since March, even as it’s obviously still running well north of target.

“Contrary to the Fed, the ECB must have had a relatively quiet summer break,” ING’s Carsten Brzeski remarked, previewing the ECB decision. “[With] headline inflation closing in on 2% and longer-term inflation forecasts stable at around 2%, the ECB has enough reasons to further reduce the level of policy restrictiveness.”

To be sure, there are lingering concerns about services inflation, which ran 4.2% last month in Europe. And not everyone’s convinced the threat of “domestically-produced” inflation (if you will) has receded such that policymakers need no longer be concerned. As Brzeski put it, “still high wage growth and still too high, albeit declining, selling price expectations suggest the fight against inflation is not entirely over.”

But as the figure below shows, wage growth is declining steadily and it was much slower in Q2 than ECB staff predicted just three months ago.

You can certainly argue that 4.3% pay gains, if sustained, aren’t conducive to 2% services inflation. But the idea is to be ahead of the game, not behind the curve. And it beggars belief that wage gains will be sustained at that rate.

The ECB will be 50bps into the cutting cycle come Thursday. Christine Lagarde’s adopted a quarterly cut cadence and markets generally expect that to continue.

Elsewhere, China will release CPI and PPI data for August. Regardless of what it shows, the deflation concerns swirling around the world’s second-largest economy won’t dissipate. At some point over the next week or so, Beijing will also deliver updates on industrial output, retail sales and fixed investment.

Frankly, the Chinese economy’s a lost cause until further notice. The housing slump’s a full-blown crisis, Xi’s lost the plot entirely (or else he never intended to follow it in the first place, which is concerning on a number of fronts) and they’re fudging the BoP data now.

Global equities come into the new week reeling. Last week’s 3.7% drop was the worst weekly showing of the year.