A Federal Open Market Committee meeting and its accompanying decision on interest rates will highlight a heavy week of economic releases in the United States. In Canada, the flow of data will be light.

The Fed meets on Tuesday, although no one is expecting it to move on rates yet. Still, the announcement and policy statement will be closely watched. “With only the brave or foolhardy predicting a move, attention will focus on Fed’s two–pronged risk synopsis,” predicts CIBC World Markets. “A shift from a neutral to a growth bias in the economic momentum part of the assessment is a possibility, and would weigh at least temporarily on the front end.”

“In sum, look for the communiqué accompanying the Fed decision to be very similar to that of the August missive, which pointed to evidence of accelerating economic activity and ongoing disinflationary risks,” says TD Bank. “However, the choice of wording might be tinkered with slightly to clearly convey to markets that the Fed is prepared to keep its benchmark federal funds rate at the current low 1% level for some time to come.”

BMO Nesbitt Burns agrees that the Fed will not be moving rates. “The Fed has assured the markets that no rate increase will be forthcoming for a lengthy period,” it says, noting that the markets are pricing the Fed Funds rate at 1% until next March.

TD says that futures contracts are still pricing in a rate increase of 25 basis points as early as the first quarter of 2004, and a total of 125 basis points during the year as a whole. “The Fed’s message will suggest this scenario remains overly aggressive,” it says. “Based on our current forecast, the U.S. central bank is not likely to raise interest rates until the fourth quarter of next year.”

Ahead of the Fed decision, RBC Financial notes that Monday’s U.S. releases include a number of important updates on business trends and the manufacturing sector in particular. August’s industrial production, capacity utilization, inventories and the second quarter’s current account are all due. Tuesday also brings the Consumer Price Index.

“The rest of the week will be equally busy with a number of potentially market moving releases,” RBC says. These include housing starts on Wednesday, the leading indicator and the Philly Fed index on Thursday.

“Although the CPI comes out Tuesday, markets will likely be paying more attention to the growth-related indicators, including August Industrial Production, housing starts and last but not least, the Philly Fed,” says CIBC.

Nesbitt expects the Philly Fed survey to trump the August industrial production report in importance, “as timeliness is critical around turning points in growth”. It says that the survey cannot possibly remain as vigorous as it was in August, but should stay in the growth zone.

As for Canadian data, July vehicle sales are out on Monday. Manufacturing shipments and inventories are due on Tuesday, international transactions in securities on Thursday, and wholesale trade numbers on Friday.

“In Canada, markets will have to content themselves with mostly lightweight data releases in the week ahead,” laments CIBC. “Tuesday’s manufacturing shipments report will garner some attention, with a previously-reported uptick in merchandise exports signaling a nominal, if not real, improvement at the factory gate.”

Nesbitt also expects the latest report on manufacturing shipments and orders to be the most important. “Shipments declined for three consecutive months from April to June, but this report is expected to show some modest recovery,” it says, predicting that shipments will rise by 1%.

But CIBC says there’s not really a whole lot to chew on, “with upcoming CPI and employment reports the key determinants of when (and if) the Bank opts to cut again.”

There are no notable earnings reports on tap for the week.