US Federal Reserve officials are likely to see more signs this week that progress in reducing inflation is slowing. The Bank has recently indicated that it intends to maintain high interest rates for a longer period of time than previously expected, which could confirm a change in tone.
The US personal consumption expenditure (PCE) price index for March, which will be released on the 26th, is expected to rise 2.6% year-on-year, accelerating slightly as energy prices rise. The core PCE price index, which excludes energy and food, is expected to rise 0.3% month-on-month and 2.7% year-on-year.
Fed’s Favorite Inflation Gauges Seen Holding Up
Source: Bureau of Economic Analysis, Bloomberg
Core PCE data may not be as strong as the US Consumer Price Index (CPI), which spooked markets with faster-than-expected growth. But Federal Reserve Chairman Jerome Powell and other monetary officials have indicated that it will take some time before they are confident that inflation is slow enough to start cutting interest rates.
Personal spending for March, which will be released at the same time, is expected to show steady growth again, supported by strong employment. Growth in personal income is expected to accelerate.
On the 25th, US gross domestic product (GDP, preliminary figures) for the period January-March (first quarter) is published. The pace is expected to be slower than last quarter’s steady pace, but higher than what US Federal Reserve officials consider sustainable over the long term.
In addition, in the United States, the Manufacturing and Purchasing Managers’ Index (PMI), new home sales, and the University of Michigan’s Consumer Confidence Index are published.
Outside the US, attention will be focused on whether the Bank of Japan will signal future interest rate hikes after its monetary policy meeting on the 26th.
On the 22nd, European Central Bank (ECB) President Lagarde is scheduled to give a lecture at Yale University. Germany’s IFO Business Confidence Index for April, which will be released on the 24th, is expected to improve on the previous month. Inflation data is expected to be released one after the other from Australia to Mexico.
news-rsf-original-reference paywall">Original title: Fed’s Preferred Price Gauge to Back Rate-Cut Patience: Eco Week (excerpt)
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