There are a handful of important economic releases on the lineup for next week, although the focus will likely be Tuesday’s meeting of the U.S. Federal Reserve Board, what it does with rates and what it says about the economic impact of Hurricane Katrina will be closely watched by the markets.

In Canada, next week brings with it three significant releases, RBC Capital Markets says — wholesale trade for July is due out on Tuesday; July retail sales are up for release on Wednesday; and the August reading of the consumer price index is slated for Thursday.

“A strong, if unsurprising, report on retail sales will provide an offset to weak manufacturing activity in July, putting GDP for the month on track for a moderate gain after a disappointing June,” predicts CIBC World Markets. “As for inflation, it’s rampant in energy prices, but the Bank of Canada’s core measure is still comfortably below its 2% target.”

BMO Nesbitt Burns says that it’s looking for the overall CPI to rise 0.4% in the month, which will bump the headline inflation rate to 2.6%. And, it expects core prices to just nudge up 0.1% in August, pushing the year-over-year core inflation rate up to 1.6% from 1.4% in July. “That’s no big deal for the Bank of Canada — they expected core inflation to average 1.7% in Q3, and it is on track to come in below that pace,” it says.

“The powerful one-two combination of incentive-charged auto sales and pumped-up gasoline prices is expected to drive up retail sales by 1.3% in July,” BMO Nesbitt predicts, noting that wholesale trade is expected to show a modest 0.4% drop.

In the U.S., August’s housing starts are due out on Tuesday morning. “That same afternoon, we expect that the U.S. Federal Reserve will hike interest rates by a quarter point,” says RBC. “What the Fed has to say about Katrina’s effects and energy market developments will be closely scrutinized,” it adds.

CIBC is also calling for another 25 basis points hike, but it allows that the Fed could hold off on an increase now, but promise one for November. “Though we think this could be the last rate move, it’s too soon for the Fed to hint of that shift given the limited picture of the post-Katrina economy now available,” it says.

TD Bank and BMO Nesbitt Burns are also expecting the Fed to hike on Tuesday. “Given that firms were already facing intensified wage pressures via rising unit labour and benefit costs, we believe there is plenty of reason for the Fed to err on the side of caution and raise rates on Tuesday,” comments TD. “If the central bank does pause, it is more likely to occur at the November 1st meeting, when members at least have some hard figures on the magnitude of the regional and national scope of the economic setback.”

BMO Nesbitt allows that, “The market is still sensing a very slight chance that the optics of raising rates amid such economic calamity could combine with this week’s very favourable core PPI and CPI readings to persuade the Fed to pause.”

However, “Our view is that the offsetting nature of Katrina’s direct impacts — the economic drag caused by the devastation and subsequent economic boost caused by the rebuilding — suggests that they should have minimal impact on Fed policy. Instead, it’s the heightened risks posed by energy prices that will likely be Katrina’s legacy for the Fed, even though prices have dropped from their post-hurricane highs.” It is predicting a November rate hike followed by a December pause.

CIBC notes that some of the immediate effects of Katrina will start turning up next week. “Watch for a huge jump off the scale in initial jobless claims as displaced workers file for benefits, and for further news on oil and gasoline inventories and on the extent of damage to Gulf production prospects. The only major monthly indicator, housing starts, will take a back seat to these other developments,” it says. CIBC also suggests that if the Fed does hike rates, markets will likely price in a virtually certain October rate hike in Canada too.

The earnings schedule is very light next week, with just Cognos Inc. and Gennum reporting on Wednesday and Husky Injection Molding Systems Ltd. on Thursday. In the US, Goldman Sachs, Morgan Stanley and AG Edwards are all due to report.