The US Federal Reserve takes centre stage in the coming week, eclipsing industry data from China, another grim inflation reading from the eurozone and rate decisions in Japan and Switzerland.

Guessing whether the Fed hikes rates on Thursday or opts for a later date, perhaps December, is something of a futile exercise because even the rate setters appear to be wavering and the decision will probably come down to the wire.

An unexpected drop in the jobless rate to 5.1 per cent and an upward revision in second quarter growth to 3.7 per cent support calls for a hike as the labour market tightens and utilisation is at its best level since the global financial crisis.

Yet, futures only price a 24 per cent chance of a hike as emerging markets, particularly China, struggle, inflation remains benign and some notable Fed watchers, like former Treasury Secretary Larry Summers, argue against a hike.

“My best guess is that the committee is also confused about what the right decision is, and as a result they are waiting to the last minute with making a decision,” Torsten Sloek, chief international economist at Deutsche Bank said. “The cost of this approach is that market expectations become unanchored but they may view this as a small cost relative to sending strong signals ahead of a meeting where there seems to be limited consensus among rate setting members,” Sloek said.

China’s slowdown is likely to be a key worry for the Fed and a 14 per cent drop in Chinese imports over the past year, the 10th straight monthly drop, along with an annual factory gate price deflation of almost 6 percent, does not help rate hike arguments.

Data yesterday showed growth in China’s investment and factory output missed forecasts in August, raising the chances that third-quarter economic growth will dip below 7 per cent for the first time since the global crisis.

Factory output rose 6.1 per cent last month from a year earlier, less than the 6.4 per cent expected but up from July’s 6.0 per cent.

Fears of a hard landing, the prospect of deflation and billions of dollars spent on keeping the yuan steady raise the prospect of more rate cuts and currency devaluation by Beijing, setting markets up for more volatility.

In Europe, the key item will be final August eurozone inflation data due on Wednesday, likely supplying another arguments for the European Central Bank to beef up quantitative easing.

Price growth is seen holding steady at 0.2 percent, far off the ECB’s target of just under 2 percent and ECB President Mario Draghi has already warned that the eurozone could dip back into deflation on lower commodity prices and weaker growth from emerging markets. The big inflation miss and a modification of quantitative easing are just the latest in a long list of troubles for central banks around the globe as developed nations struggle with weak growth and anaemic inflation.