For the first time in three months, US policymakers will be releasing their interest rate projections on Wednesday, and investors are expecting details on the Federal Reserve's monetary policy position. Although Chair Jerome Powell is anticipated to keep borrowing prices same, the authorities' projected interest rate is yet unknown.
If policymakers are lowering their intentions for relaxing, projections will show that. While China and Sweden are expected to provide inflation statistics, the Bank of Japan may decide to reduce its bond purchases.
When US officials revise their interest rate projections on Wednesday for the first time in three months, investors may learn more about the Federal Reserve's determination to loosen monetary policy.
For the seventh straight meeting, the central bank, headed by Chair Jerome Powell, is almost likely going to keep borrowing prices unchanged. However, officials' rate estimates are less clear.
According to the consensus estimate in a Bloomberg poll, 41% of economists anticipate the Fed will indicate two cuts in the widely followed "dot plot," while an equal proportion anticipate only one or no cuts at all.
The Federal Open Market Committee has maintained borrowing rates at a two-decade high since July, after an increase in their benchmark federal funds rate of more than five percentage points beginning in March 2022.
According to Bloomberg Economics:
"One of the most important FOMC meetings of the year will be in June, when Powell may provide the strongest indication yet of the rate-cut timeline. Unlike the March version, which showed three 25-basis-point cuts, the new dot plot is probably going to show two this year.
We anticipate Powell to sound somewhat dovish during his press conference since growth indicators have been repeatedly surprise to the negative since the April 30-May 1 meeting, even if inflation statistics have matched expectations. This is according to chief US economist Anna Wong.
In contrast to the central bank's 2 percent aim, the Fed's favored measure of inflation for the year that ended in April was 2.7%. A spike in payrolls last month and rising salaries, according to data published on Friday, caused traders to reduce their expectations for rate cuts this year.
According to Jefferies senior US economist Thomas Simons, "the Fed will choose to keep rates steady for longer." Before they feel comfortable lowering rates, "they will want to see a renewed run of higher-quality data in in tandem with an inflation trend closer to 2 percent."
Governor Tiff Macklem of the Bank of Canada, who just became the first of the Group of Seven central bankers to begin an easing cycle, will address a conference in Montreal.
The week's highlights will also include a Bank of Japan decision that might reduce asset purchases, inflation data from China to Sweden, and significant UK wage figures.
Asia
When its board makes a policy decision at the end of a two-day meeting, the BOJ takes center stage on Friday.
Although it is anticipated that the bank would maintain its short-term rate, authorities may debate whether to scale down bond purchases, according to persons with knowledge of the situation.
If Japan's long-term interest rates rise and the yield difference with US Treasuries narrows, it might be a move that supports the yen.
The BOJ meets after the announcement of updated first-quarter growth figures by the government on Monday, which is expected to confirm that the economy shrank for the second time in three quarters.
In other news, after a sharp decline in consumer inflation in May, the State Bank of Pakistan is expected lowering its benchmark rate by one full percentage point on Monday. Taiwan's and Thailand's central banks will also be meeting this week.
According to statistics, factory-gate deflation may fall to 1.5%, the lowest rate of price decline since February 2023, while consumer inflation in China is predicted to pick up a little speed to 0.4 percent year over year in May.
Malaysia releases April manufacturing sales value and industrial output, while India receives pricing figures in addition to industrial production.
India and the Philippines are expected to disclose trade results on Tuesday, while Australia will issue its NAB business conditions and confidence figures on Tuesday. On Thursday, a wealth of labor data will be released.
Africa, the Middle East, and Europe
In the next week, the UK will provide some statistics highlights. Labor-market data on Tuesday could indicate a pick-up in wage growth in the three months leading up to April; experts are predicting an annual gain of 6.1%. A result like this would probably strengthen the argument against a rate decrease by the Bank of England this month.
According to data released on Wednesday, the gross domestic product most likely did not increase in April for the first time this year. The reductions in both manufacturing and services are anticipated to have occurred in April, indicating a subpar start to the second quarter.
In the next days, BOE officials have decided to maintain a self-imposed quiet period while the UK election campaign gets underway.
The industrial output statistics in the euro zone is expected to show the least gain in three months on Monday, indicating that the area also started the second quarter weakly.
Following their rate reduction last week, speakers from the European Central Bank this week include vice president Luis de Guindos, chief economist Philip Lane, governors of France and Germany, as well as ECB president Christine Lagarde.
The elections for the European Parliament, the results of which are expected to be released late on Sunday, will also be watched by investors.
According to Bloomberg Economics...
"The EU will need to act in the next parliament to address the productivity gap that has emerged with the US economy; else, its standing as a significant participant in the world economy would be jeopardized. The budgetary sustainability and investment for a more affluent, environmentally friendly future must be balanced. In a time of great global uncertainty, it will also need to determine its position on trade policy and defense. Simona Delle Chiaie and Jamie Rush.
After an earlier estimate that the kingdom's economy fell 1.8% in the first three months of the year—the third straight quarter of contraction—Saudi GDP figures on Sunday will provide an updated picture when looking south.
The government-priority non-oil economy expanded 2.8% year over year in the first quarter, down from higher levels seen in the preceding quarters.
Kenya's budget for the year ending in June 2025 will be presented on Thursday by Treasury Secretary Njuguna Ndung'u of the East African country. He is anticipated to provide further details on how he intends to limit spending, reduce borrowing, and enact bold tax policies to help the nation at high danger of financial hardship reach its lowest budget deficit in 15 years.
throughout the meanwhile, a number of consumer pricing reports for May will be released throughout the surrounding area:
On Monday, Norwegian inflation is predicted to decrease but remain higher than 3%.
When Ghana's data is released on Wednesday, investors will be intently observing any softening in the country. With an average of 24% so far this year, the pricing measure has shown to be persistent.
Economists predict that Israel's inflation would accelerate to 3.2% on Friday from 2.8% a month earlier.
The same day, Russian statistics could indicate that consumer price increase exceeded 8%, which is double the central bank's objective, as pricing pressures in an already hot economy brought on by President Vladimir Putin's conflict in Ukraine continue to mount.
By then, Sweden will also provide figures. It is predicted that the Riksbank's yearly consumer price index would decline by about 2 percent.
South America
According to Brazil's central bank's poll of experts released on Monday, the country's inflation projections for 2024–2026 as well as the May reading might further deteriorate.
Notably, experts increased their projection for the key rate in 2024 by a quarter point to 10.25 percent, from 9 percent in April. This increase fueled rumors that the bank will maintain its current rate of 10.5% this month.
The consumer price data for May, which is released on Tuesday, is expected to indicate an eight-month increase from the 3.69 percent rate in April. Brazil's statistics office releases information on retail sales for April on Thursday.
The early consensus is that May will see a very tiny increase in inflation in Colombia—the first increase in the last 14 months. The April statistics on manufacturing, retail sales, and industrial output are also scheduled.
From 8.8% in April, Argentina's monthly inflation rate most certainly decreased for a sixth month in May. The central bank conducted a poll of analysts, and their results indicate a 5.2% print, which suggests an annual rate of 279.6%, which is lower than the reading of 289.4% from April.
After over eighteen years in charge of the bank, Julio Velarde, one of the world's longest-serving central bankers, has managed to bring inflation back to goal in Peru. Consumer prices are back at the target rate of two percent going into Thursday's rate meeting. A quarter-point reduction to 5.5% is anticipated.
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