The Federal Reserve’s favorite inflation gauge is on track to post its mildest monthly increase since late last year, giving officials a springboard to start cutting interest rates as early as September.
Economists see the personal consumption expenditures price index unchanged in May and the core measure, which excludes food and energy, rising just 0.1%, according to median forecasts in a Bloomberg survey of economists.
The report, due to be released on Friday, is expected to show an annual rise of 2.6% for both the headline and core indexes. The expected increase in core, a more accurate indicator of underlying inflation, would remain at its smallest since March 2021.
Since their last meeting, Fed officials have said they are encouraged by the calming of other inflation measures, including the consumer price index, but that they need to see such progress over several months before lowering interest rates.
At the same time, the labor market, another part of the Fed’s dual mandate, is still performing well, even if it has slowed. A healthy jobs market gives policymakers some flexibility in terms of when to cut interest rates.
The latest inflation numbers are accompanied by consumer spending figures, which tell us more about spending on services, while recent retail sales data suggests demand for goods is weakening. Median forecasts predict nominal consumer spending and incomes will accelerate slightly.
Bloomberg Economics’ take: “We don’t think the slowdown in inflation will be enough to convince officials that inflation is steadily declining toward the Fed’s 2% target by the time of the July FOMC meeting.” –Estelle Wu, Stuart Paul and Eliza Winger, economists
Other data due next week include consumer confidence for June and a report on contract signings for new and existing homes in May. The government is also due to release its third forecast for first-quarter economic growth, as well as durable goods orders for May.
In Canada, central bank governor Tiff Macklem is due to speak in Winnipeg, May consumer price data is expected to show core inflation easing for the fifth consecutive month, and April’s gross domestic product (GDP) release and preliminary May figures will also provide key insights.
Elsewhere, inflation figures in the three largest euro zone countries may also please authorities, while central banks in Sweden and Mexico are likely to keep interest rates on hold.
click here Below is a summary of last week’s events and our outlook for the global economy.
Asia
Asia kicks off this month with the release of minutes from the Bank of Japan’s policy meeting.
Interest in the document has grown after officials pledged to reduce bond purchases but also said investors should wait until late July to learn more about the size of the cuts. Hints could emerge as soon as Monday.
Meanwhile, Reserve Bank of Australia Deputy Governor Christopher Kent speaks on Wednesday, followed by Andrew Hauser the next day. Attention is focused on whether there are any new signs of a more hawkish stance after the governors said they considered raising interest rates at their meetings this month.
They spoke as data released on Wednesday is expected to show Australia’s inflation rate rose slightly in May.
In Japan, the release of the Tokyo Consumer Price Index for June will provide a leading indicator of domestic inflation trends. Bloomberg Economics expects inflation in the capital to rise to 2.1% due to higher utility prices as the government cuts energy subsidies.
Other countries that have released pricing updates include Malaysia, Singapore and Uzbekistan.
Other data includes China’s industrial gains due on Thursday that could reflect benefits from government efforts to upgrade capacity, while trade figures are due to be released this week in New Zealand, Vietnam, Sri Lanka, Thailand and Hong Kong.
South Korea released two indicators of domestic demand: retail sales and consumer confidence.
Meanwhile, China and the European Union Start negotiations Regarding the European Union’s plans to impose tariffs on electric vehicles imported from Asian countries.
Europe, Middle East, and Africa
The Riksbank’s decision, due on Thursday, will be the center of attention. Economists are widely expecting Swedish authorities to pause their easing cycle after their first rate cut last month, a precursor to a similar move by the European Central Bank, which is expected to keep rates unchanged in July.
Policy makers are growing more confident that Sweden is getting inflation under control and could approve two more interest rate cuts this year to shore up an economy that EU officials predict will have one of the weakest growth rates in the bloc.
Below is a summary of decisions by other central banks in the region.
- On Wednesday, Zimbabwe launched a new currency, JigIt was introduced in April as an anti-deflation measure.
- Czech policymakers could cut borrowing costs by 25 or 50 basis points on Thursday, inflation I was beaten.
- On the same day, Turkey’s central bank is likely to keep interest rates unchanged at 50%, pending slower consumer price growth from last month. The 75% figureOfficials are confident that borrowing costs will start to rise. Significantly decreased In the second half.
In the euro zone, inflation data from three of the four largest economies is due to be released this weekend, with France and Spain expected to report slowing price growth and Italy showing price growth remains weak.
The figures may give officials encouragement after inflation accelerated more than expected across the region last month, leading to a slowdown in economic growth.The ECB’s consumer price expectations survey is also due to be released on Friday.
Other reports include Germany’s Ifo business confidence index due for release on Monday, which is expected to show a further modest improvement in sentiment among companies in the region’s largest economy.
Policy makers scheduled to speak include Bank of France Governor Francois Villeroy de Galhau, and the country’s economy will be under close scrutiny from investors. Upcoming parliamentary electionsAlso due to attend are European Central Bank (ECB) chief economist Philip Lane and the central bank governors of Germany and Italy.
Meanwhile, in the UK, Bank of England officials decided on June 20th: Possible rate cut in August — He continues to avoid public comments ahead of a general election on July 4. The final first-quarter GDP figure to be released on Friday will also include current account figures.
Looking to Africa, Zambia’s growth figures for the first three months of 2024, due on Thursday, may reveal some of the impact of a devastating drought that is expected to slow growth to 2.5% this year from 5.2% in 2023.
The following day, Kenya’s June inflation figures will provide further evidence of the impact. Floods and heavy rains What effect has it had on food prices there?
latin america
The Bank of Mexico will release updated consumer price index data on Monday ahead of its monetary policy decision on Thursday, but the data is unlikely to provide any stimulus to the bank. With inflation rising again and running even higher than its target, the bank is almost certain to keep its policy rate unchanged at 11% for its second meeting.
All eyes are on Brazil’s central bank as it publishes minutes from its June 18-19 monetary policy meeting on Tuesday and its quarterly inflation report on Thursday. Between the two meetings is the mid-month release of the benchmark consumer price index.
While keeping interest rates unchanged at 10.5% was not a surprise, the relatively calm tone of the post-policy statement raised some eyebrows.
Argentina’s economy appears to have fallen into a technical recession at the start of 2024, with a sharp decline expected quarter-on-quarter and year-on-year. Analysts surveyed by Bloomberg expect a 5.4% drop from a year ago, the biggest since the pandemic began.
While many of the region’s other main inflation-targeting central banks have stayed on the sidelines or taken a more hawkish stance, Colombia’s central bank is expected to cut its benchmark interest rate by half a percentage point to 11.25%, down 200 basis points from last year’s peak of 13.25%, and set to reach 8.5% by the end of 2024.