On Monday, SNB Chairman Thomas Jordan will speak at an event hosted by the SNB in Zurich. While these events generally do not cause significant market volatility, they are worth monitoring in case Jordan discusses inflation or possible rate cuts. After last week’s surprising drop in inflation figures, the market expects the SNB to cut rates again in June, before Jordan’s term ends in September.
Tuesday draws attention to Australia, with the release of the Westpac Consumer Confidence and NAB Business Confidence Indexes.
On Wednesday, the central points will be multiple: the RBNZ will announce its monetary policy decision, while the United States will publish inflation data and the minutes of the FOMC meeting. Additionally, Canada will make its own monetary policy announcement from the BoC later today.
On Thursday, the focus will be on the ECB’s monetary policy statement, including discussions on the main refinancing rate and the ECB press conference. In the United States, the focus will be on Core PPI m/m, PPI m/m and unemployment claims figures.
Finally, on Friday, the UK will release its m/m GDP data, while the US will unveil preliminary figures for consumer confidence in the metric and preliminary figures for inflation expectations in the unit of measurement.
Last month, Westpac consumer confidence fell 1.8% to 84.4, maintaining a strongly pessimistic stance (below 100) despite signs of improvement in previous months. This suggests continued consumer apprehension about the economy in the near term. Although falling inflation could boost confidence in April, persistently rising fuel prices could offset any positive effects. Additionally, the absence of a policy decision from the RBA in April could further contribute to uncertainty surrounding future economic policies and guidance, which could impact confidence.
During this week’s meeting, the RBNZ is expected to keep its current monetary policy unchanged. Although New Zealand’s recent GDP figures fell short of expectations and uncertainties persist over the near-term inflation outlook, the RBNZ is expected to maintain its outlook announced in February. Although the market expects a possible cut in the official policy rate (OCR) in August, the Bank has not yet given indications supporting this timetable.
Following another strong jobs report, pressure on the Federal Reserve to cut interest rates has eased, prompting the market to turn its attention to the possibility of rising inflationary pressures .
The Fed has repeatedly stressed the need for additional evidence that inflation is moving closer to its 2% target. This week’s data will help determine whether the recent rise in inflation was simply transitory or a sign of a more sustained trend.
Headline inflation is forecast to increase by 0.4%, mainly due to higher gasoline prices, while core inflation, excluding food and energy, is expected to increase by 0.3%. . Wells Fargo analysts forecast that core goods have entered deflationary territory, but services inflation was largely unchanged and will need to cool further in order to bring down overall inflation.
At the next meeting this week, it is likely that the Bank of Canada will maintain its current monetary policy. Recent inflation data has been lower than expected and indications suggest that this downward trend may persist in the months to come. Market expectations are leaning towards a possible interest rate cut in June. Therefore, the focus at this meeting will be on any changes in language regarding inflation, as well as any monetary policy guidance and updates to economic forecasts. Any adjustments made during this meeting could allow the Bank of Canada to make its first rate cut in June.
The ECB is expected to keep monetary policy unchanged this week, but after the latest comments from policymakers, the market is expecting a first rate cut in June. Eurozone inflation data fell. Growth in economic activity was weak in the second half of last year, but there have been signs of improvement this year. If economic activity continues to improve, the ECB will not be forced to cut rates too soon and the current message is that further price cuts and wage growth are necessary.
The consensus for US core PPI m/m is 0.2% vs. 0.3% previously and for PPI 0.3% vs. 0.6% previously. Rising energy prices are boosting growth, but any increase in basic goods prices will pose a risk to the CPI. Markets will pay particular attention to the PPI components that influence underlying PCE inflation, which Citi analysts estimate will see an increase of 0.30% in March.
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