US Fed inflation measure shows increasing prices
The most recent update to the Federal Reserve’s preferred inflation measure is not expected to disrupt the increasing agreement within the US central bank regarding the necessity for interest-rate increases this year. Forecasters anticipate that the personal consumption expenditures price index, scheduled for release on Thursday, will indicate an acceleration on both a monthly and year-over-year basis for May. That report will conclude a month characterised by disappointing inflation data, following earlier releases that illustrated the pervasive effects of the energy shock throughout the economy. Kevin Warsh, who presided over his inaugural policy meeting as the central bank’s new chairman on Wednesday, declined to provide reporters with any insights regarding his perspective on prices or interest rates. That position may elevate the importance of insights from Federal Reserve colleagues as investors look for greater clarity regarding the trajectory of monetary policy in the short term. The upcoming week will feature significant events, including keynote remarks from New York Fed President John Williams at a symposium on June 25, alongside an appearance by Austan Goolsbee of the Chicago Fed at a different event on the same day. Minneapolis Fed President Neel Kashkari is scheduled to participate in a panel discussion on June 26.
Economics indicates: “The June FOMC meeting, with half of the committee leaning toward a tighter policy path, sent a hawkish jolt through markets. Even though Warsh didn’t submit his own dot for the dot plot, his tone at the news conference seemed notably hawkish to us. A hot PCE inflation reading will likely reinforce that hawkish message.” Additional information on the US economic calendar features updates on new home sales on Wednesday, durable goods orders on Thursday, and international merchandise trade on Friday, all pertaining to the month of May. The University of Michigan will also provide the final results on Friday of its June survey of consumer sentiment. In Canada, the inflation data expected on Monday is likely to indicate an acceleration to 3% in May, driven by rising petrol prices, while core measures are anticipated to remain subdued. On Wednesday, the Bank of Canada will release a summary of the deliberations that resulted in the decision to maintain steady rates this month, despite acknowledging a short-term surge in costs. In other regions, the purchasing manager indexes spanning from Japan to the UK, along with the testimony from the head of the European Central Bank, and the monetary policy decisions from Thailand to Mexico, will constitute significant focal points.
Investors are confronted with a packed calendar in the Asia-Pacific region, with a focus on policy support from China, inflation metrics from Japan and Australia, and economic momentum in India. In China, the Loan Prime Rate fixing on Monday is anticipated to remain steady, yet it serves as a crucial indicator amid inconsistent demand and uncertainties regarding the robustness of the recovery. Several nations in the Asia-Pacific region have issued updates regarding inflation rates. Australia’s trimmed mean gauge of annual consumer-price growth for May is set to be released on Wednesday, following an acceleration to 3.4% in the preceding month. Hours later, Andrew Hauser, an official from the Reserve Bank of Australia, delivers his remarks. Following national data for May, the Tokyo price gauge due on Friday for June is anticipated to reflect the effects of increasing energy prices, although the fundamental trend may be clouded by the influence of subsidies. Singapore’s headline inflation, due Tuesday, is anticipated to accelerate to 2% in May, while Hong Kong is set to release its CPI on the same day. Japan’s policy communication will be under careful scrutiny. BOJ Deputy Governor Ryozo Himino is scheduled to speak on Wednesday, coinciding with the release of the BOJ’s summary of opinions from the June meeting, during which interest rates were increased to their highest level in 31 years. Board member Naoki Tamura is scheduled to speak on Thursday. Growth momentum will undergo scrutiny via surveys. Japan’s flash PMIs will be closely monitored for indications that the recovery is becoming more widespread. A firmer manufacturing reading would bolster the perspective that Asia’s export cycle is on an upward trajectory, whereas softer services would cast doubt on the strength of domestic demand. India’s HSBC PMIs stand out as significant releases. India has emerged as the region’s premier growth narrative, raising the question of whether economic activity continues to accelerate or is stabilising at a robust rate, with the services sector poised to play a pivotal role. India’s infrastructure output contributes to an industrial perspective. Taiwan’s export orders, labor-market figures, and industrial production will significantly influence the economic landscape for trade-sensitive economies. Japan’s services-price data, machine tool orders, and preliminary leading economic indicator will provide insights into consumption and business investment. Australia’s labor-market data are forthcoming, while the decision from Thailand’s central bank on Wednesday will be scrutinised for how policymakers navigate the challenges of weak domestic demand in the context of currency and external pressures.
The UK will remain in focus as speculation intensifies regarding the leadership of Prime Minister Keir Starmer following the election of his potential challenger Andy Burnham to parliament. Attention will also be directed towards the Bank of England, as three policymakers are set to make appearances following last week’s decision to maintain rates in a split vote. A glimpse of the cumulative impact of over three months of energy disruption on companies will be revealed with PMIs in both the UK and the euro zone on Tuesday. Modest enhancements in the composite measures for both entities are expected. In the euro region, business confidence data from France is set to be released on Tuesday, followed by the German Ifo gauge on Wednesday. The ECB’s survey of inflation expectations on Friday will be a significant focus, particularly in light of the recent decision by officials to implement the first Group of Seven rate increase following the onset of the Iran war. President Christine Lagarde is set to provide testimony to the European Parliament on Monday, marking the beginning of a week filled with significant events for policymakers.
Argentina President Javier Milei is poised to receive new assessments regarding his economic management, as first-quarter output and unemployment figures are forthcoming. Growth is expected to have decelerated compared to both the previous three months ending in December and the same period a year prior. However, trade flows, exports, and a rebound in demand suggest the potential for accelerated growth in the upcoming quarters. Paraguay’s central bank convenes as the economy shows no demand for stimulus — growth reached 6.6% in 2025 — while inflation stands at 2.4%, comfortably within the target range set by policymakers. The minutes of Banco Central do Brasil’s June 17 vote to cut its rate to 14.25% are highly anticipated, as several observers of Brazil expressed confusion regarding the post-decision statement, which has raised concerns about credibility. The central bank’s quarterly monetary policy report will likely revise inflation estimates upward — with particular attention to the first quarter of 2028 — while the robust performance of the economy in early 2026 may necessitate adjustments to growth projections. As the week concludes in Brazil, the forthcoming mid-month inflation report is expected to indicate that headline readings will surpass the 4.5% upper limit of the target range. The primary focus from Chile will be the minutes of the central bank’s decision on June 16 to maintain the key rate at 4.5%. The post-decision statement moderated the tone from April’s communique, indicating that inflation risks have become more balanced. In Mexico, mid-month inflation data could provide new insights that align with the central bank’s perspective that inflationary pressures are transitory — the latest headline figure of 3.77% has decreased from 4.63% in March. On the monetary policy front, Banxico has indicated that a hold at 6.5% on Thursday is virtually assured. A majority of analysts anticipate that it will remain at that level until 2027.
