Policymakers’ preferred inflation gauge – the personal consumption expenditures price index – probably stayed elevated in March, according to data due in the coming week.
The measure is seen accelerating slightly to 2.6% on an annual basis as energy costs rise. The core metric, which strips out energy and food, is expected to rise 0.3% from the prior month after a similar gain in February.
While the core PCE data may not be as strong as the consumer price index – which topped estimates and rattled markets earlier this month – Fed Chair Jerome Powell and other officials have signaled that it’ll take longer for them to gain the necessary confidence in a downward trajectory of inflation before cutting rates.
Policymakers will observe the traditional public-speaking blackout period during the coming week, ahead of their two-day meeting that concludes May 1. The fresh inflation numbers on Friday will be accompanied by March personal spending and income figures. Against a backdrop of healthy job growth, economists project another solid gain in household outlays for goods and services. Income growth is also forecast to accelerate.
Other data for the week include the government’s initial estimate of first-quarter growth, which probably cooled from the prior period’s robust pace but still ran above what policymakers deem is sustainable in the long run.A composite gauge of activity at manufacturers and service providers will also be released, as well as new-home sales. Later in the week, the University of Michigan will publish its final April reading of consumer sentiment and inflation expectations.Looking north, the Bank of Canada’s summary of deliberations will shed more light on the debate between officials about what they want to see before cutting rates. Retail sales for February and a flash estimate for March may confirm signs of a consumer slowdown at the start of the year.
Elsewhere, the Bank of Japan’s decision will be scrutinized for hints of future rate hikes, Turkish officials may keep borrowing costs on hold, Germany’s Ifo business index might signal improvement, and countries from Australia to Mexico are set to release inflation numbers.