Global major central banks are heading into September meetings with diverging policy paths: the Federal Reserve is facing weaker U.S. data that has cooled expectations for another rate hike, while the European Central Bank and the Bank of Japan are under renewed pressure to tighten, according to Jiemian News.

The Fed will hold its next policy meeting on September 15-16 local time. Minutes from the July meeting showed several participants leaning toward a rate hike, but recent U.S. data have weakened that case. July CPI rose 3.4% year on year and core CPI rose 2.5%, both down 0.1 percentage point from the previous month. Nonfarm payrolls unexpectedly fell by 23,000 in July, while job gains for May and June were revised down by a combined 103,000. Retail sales fell 0.6% month on month in July, the first decline in nine months. Barclays' U.S. chief economist Marc Giannoni said the data may have convinced most participants that keeping rates unchanged in September is appropriate.

In Japan, the Bank of Japan's July meeting summary released on August 10 showed several members warning about inflation risks, with one saying rate hikes need to accelerate. The BOJ kept its policy rate unchanged at 1% in a 8-1 vote at the end of July, while Governor Kazuo Ueda said upside risks to prices were expanding. Japan's Ministry of Internal Affairs and Communications said on August 21 that July CPI rose 1.9% year on year and core CPI rose 1.8%. Jiemian News also reported that the yen fell to 163.99 per dollar in late July, a 40-year low, prompting a rare joint FX intervention by the U.S. and Japanese central banks. Overnight index swaps now price a 79% chance of a BOJ hike at its September 18 meeting.

In the euro area, July inflation rose to 2.9% year on year from 2.8% in June, while core inflation increased to 2.5% from 2.4%, both above the European Central Bank's 2% target. Energy inflation jumped from 8.5% to 10.3%, and services inflation rose to 3.3%. ECB chief economist Philip Lane said on August 18 that eurozone inflation is expected to hover around 3% for the rest of the year. The ECB will meet on September 10 after raising its three key rates by 25 basis points in June.