Washington, D.C. – Federal Reserve officials are bracing for confirmation that progress in the fight against inflation has hit a roadblock. This could lead to a shift in their stance, signaling a potential decision to keep interest rates elevated for a longer period than previously expected.
Key data expected in the upcoming week includes the personal consumption expenditures price index, the Fed’s favored measure of inflation. Analysts anticipate a slight increase to 2.6% on an annual basis, driven by rising energy costs. The core metric, excluding volatile energy and food prices, is also projected to rise by 0.3% from the previous month.
Fed Chair Jerome Powell and his colleagues have hinted that they will need more time to be confident in a sustained downward trend in inflation before considering rate cuts. Policymakers will enter a blackout period of public speaking ahead of their meeting on May 1, during which they will review the latest inflation figures along with March personal spending and income data.
Economists foresee continued growth in consumer spending and income, buoyed by a robust job market. Additionally, the government will release its initial estimate of first-quarter economic growth, which is expected to show a moderation from previous levels but still indicate strong performance. Manufacturing and service activity indicators, new-home sales data, and consumer sentiment readings from the University of Michigan will round out the week’s economic releases.
Looking globally, central banks in Canada, Japan, Turkey, and Germany will provide insights into their monetary policies and economic conditions. Retail sales data from Canada, inflation figures from various countries, including Australia and Mexico, and updates from the Bank of Japan and Bank of Canada will offer a comprehensive view of the global economic landscape.
In Europe, ECB President Christine Lagarde will speak at Yale University, while key euro-zone releases will shed light on consumer confidence and business sentiment. The UK will see the release of PMI numbers, public finance data, and speeches from Bank of England officials. The Swiss National Bank’s annual general meeting, South Africa’s monetary policy review, and monetary decisions from Hungary, Ukraine, Turkey, Russia, and Botswana will also be closely watched.
Latin America will witness inflation data from Mexico, along with economic updates from Paraguay, Argentina, and Brazil. Central banks in these countries are expected to make decisions on borrowing costs, while policymakers in Mexico are closely monitoring the impact of global events on inflation and economic stability.
Overall, the coming week is poised to provide valuable insights into global economic trends and central bank actions as inflationary pressures mount and policymakers navigate uncertain waters.