Federal Reserve officials are on the brink of receiving further evidence indicating a halt in progress against inflation, potentially prolonging the delay in rate cuts beyond previous expectations.
The preferred inflation metric for policymakers, the personal consumption expenditures price index, is anticipated to have remained elevated in March, with expectations of a slight acceleration to 2.6% on an annual basis, primarily due to rising energy costs. The core PCE, excluding energy and food, is forecasted to increase by 0.3% from the prior month.
Although not as robust as the consumer price index, which surpassed estimates earlier this month, Fed Chair Jerome Powell and his colleagues have hinted at a longer period required to gain confidence in an inflation downturn before considering rate cuts.
Policymakers will adhere to the customary blackout period for public speaking ahead of their upcoming two-day meeting ending on May 1. Alongside the fresh inflation figures, data on March personal spending and income will be released, with economists projecting solid gains in household outlays and income growth.
Other data for the week includes the government’s initial estimate of first-quarter growth, which is expected to have cooled from the previous period but still remained above sustainable levels in the long run.
Economists from Bloomberg anticipate real GDP growth to have slowed to approximately 2.7% in the first quarter, suggesting persistent inflationary pressures. Additionally, various economic indicators from countries worldwide, such as retail sales in Canada and inflation numbers in several countries including Australia and Mexico, are set to be released.
In Asia, attention will be on the Bank of Japan’s decision and economic indicators from China and South Korea. Europe, the Middle East, and Africa will see notable events including speeches by European Central Bank officials and key releases such as Germany’s Ifo business sentiment index. In Latin America, focus will be on inflation data from Mexico and Paraguay’s central bank decision on borrowing costs.