Fed’s Favorite Gauge Is Seen Showing Faster Inflation
The latest update to the Federal Reserve’s favorite inflation gauge is unlikely to challenge a growing consensus at the US central bank around the need for interest-rate hikes this year.
Birds fly past the Marriner S. Eccles Federal Reserve Board building in Washington, D.C., U.S., on Tuesday, Nov. 30, 2010. The Federal Reserve, under orders from Congress, plans today to identify recipients of $3.3 trillion in emergency aid the central bank provided as it fought the worst financial crisis since the Great Depression. Photographer: Joshua Roberts/BloombergPhoto by Joshua Roberts /Bloomberg
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(Bloomberg) — The latest update to the Federal Reserve’s favorite inflation gauge is unlikely to challenge a growing consensus at the US central bank around the need for interest-rate hikes this year.
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Forecasters expect the personal consumption expenditures price index, due Thursday, to show acceleration on both a monthly and year-over-year basis in May.
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That report will cap a month of bad inflation data after previous releases showed how the impact of the energy shock was spreading across the economy.
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Kevin Warsh, who led his first policy meeting as the central bank’s new chairman on Wednesday, refused to offer reporters any clues about his own outlook for prices or interest rates.
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That stance may put a premium on commentary from Fed colleagues as investors seek more information about where monetary policy is headed in the near term.
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The coming week’s highlights in that regard will include keynote remarks from New York Fed President John Williams at a symposium on June 25 and an appearance by Austan Goolsbee of the Chicago Fed the same day at a separate event. Minneapolis Fed President Neel Kashkari will appear on a panel on June 26.
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What Bloomberg Economics Says:
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“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.”
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—Anna Wong, Stuart Paul and Eliza Winger. For full analysis, click here
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Other data on the US calendar include updates Wednesday on new home sales, Thursday on durable goods orders and Friday on international merchandise trade, all for the month of May. The University of Michigan will also provide the final results Friday of its June survey of consumer sentiment.
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- For more, read Bloomberg Economics’ full Week Ahead for the US
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In Canada, inflation data due on Monday likely showed acceleration to 3% in May as gasoline prices continued to climb, while core measures remained subdued. On Wednesday, the Bank of Canada, which has said it will look through a short-term cost surge, will release a summary of deliberations that led to it keeping rates steady this month.
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Elsewhere, purchasing manager indexes from Japan to the UK, testimony by the European Central Bank chief, and monetary decisions from Thailand to Mexico will be among the highlights.
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Click here for what happened last week and below is our wrap of what is coming up in the global economy.
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Asia
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Investors face a busy Asia-Pacific calendar, centered on China policy support, Japan and Australia inflation and India momentum.
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In China, the Loan Prime Rate fixing on Monday is expected to be unchanged, but remains an important signal given uneven demand and doubts over recovery strength.
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Several Asia-Pacific nations release inflation updates. Australia’s trimmed mean gauge of annual consumer-price growth for May is due Wednesday after the measure quickened to 3.4% in the previous month. Reserve Bank of Australia official Andrew Hauser speaks hours later.
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Following national data for May, the Tokyo price gauge due on Friday for June is expected to show the impact of rising energy prices, though the underlying trend may be obscured by the impact from subsidies.
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Singapore’s headline inflation due Tuesday is seen accelerating to 2% in May, while Hong Kong also releases CPI the same day.
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Japan’s policy communication will also be closely watched. BOJ Deputy Governor Ryozo Himino speaks Wednesday, the same day the BOJ releases its summary of opinions for the June meeting, where it raised rates to their highest in 31 years. Board member Naoki Tamura speaks on Thursday.
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Growth momentum will be tested through surveys. Japan’s flash PMIs will be watched for signs the recovery is broadening. A firmer manufacturing reading would reinforce the view that Asia’s export cycle is improving, while softer services would raise questions over domestic demand.
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India’s HSBC PMIs are among key releases. India has been the region’s standout growth story, so the issue is whether activity is still accelerating or settling at a strong pace, with services likely to matter most. India’s infrastructure output adds an industrial read.
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Taiwan export orders, labor-market figures and industrial production will help frame conditions for trade-sensitive economies. Japan services-price data, machine tool orders and its preliminary leading economic indicator will offer gauges of consumption and business investment.
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Australia labor-market data are due, while Thailand’s central bank decision Wednesday will be watched for how policymakers balance weak domestic demand against currency and external pressures.
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- For more, read Bloomberg Economics’ full Week Ahead for Asia
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Europe, Middle East, Africa
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The UK will stay in the spotlight as speculation swirls over the leadership of Prime Minister Keir Starmer after the election of his prospective challenger Andy Burnham to parliament.
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Focus will also fall on the Bank of England, with three policymakers scheduled to appear following the decision to keep rates on hold last week in a split vote.
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A glimpse of the cumulative impact of more than three months of energy disruption on companies will arrive with PMIs in both the UK and the euro zone on Tuesday. Small improvements on both of their composite measures are anticipated.
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Elsewhere in the euro region, business confidence in France on Tuesday and the German Ifo gauge on Wednesday will be released. The ECB’s survey of inflation expectations on Friday will also be a highlight, given how officials there recently delivered the first Group of Seven rate increase after the outbreak of the Iran war.
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President Christine Lagarde will deliver testimony to the European Parliament on Monday, kicking off another busy week of policymaker events.
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Turning to Sweden, on Wednesday the Riksbank will release minutes of its meeting last week, when officials kept borrowing costs unchanged but signaled a higher chance of a hike.
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- For more, read Bloomberg Economics’ full Week Ahead for EMEA
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It’s a quieter week than usual for central bank decisions:
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- On Tuesday, National Bank of Hungary officials will reveal whether they’re cutting one of Europe’s highest policy rates as they grapple with a rapidly appreciating forint.
- Morocco’s central bank is widely expected to keep its benchmark unchanged at 2.25%, with the nation’s economy maintaining strong growth momentum and domestic inflation staying under control despite geopolitical tensions.
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Latin America
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Argentina President Javier Milei is set to get some fresh marks on his handling of the economy, with first-quarter output and unemployment data on tap.
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Growth likely slowed from the three months through December as well as a year earlier, but trade flows, exports and recovering demand hold out the promise of faster growth in coming quarters.
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Paraguay’s central bank meets with the economy in no need of stimulus — growth hit 6.6% in 2025 — and inflation of 2.4% nestled within policymakers’ target range.
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The minutes of Banco Central do Brasil’s June 17 vote to cut its rate to 14.25% are keenly awaited after more than a few Brazil-watchers found the post-decision statement confusing while raising credibility issues.
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The central bank’s quarterly monetary policy report will likely mark up inflation estimates — with a focus on the first quarter of 2028 — while the economy’s strong start to 2026 may call for some tinkering with growth estimates.
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Rounding out the week in Brazil, the mid-month inflation report will likely see headline readings rise further over the 4.5% ceiling of the target range.
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The major item out of Chile will be the minutes of the central bank’s June 16 decision to keep the key rate at 4.5%. The post-decision statement turned down the temperature from April’s communique, saying inflation risks have become more balanced.
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In Mexico, mid-month inflation data may offer fresh hints supportive of central bank’s view that inflationary pressures are temporary — the most recent headline print of 3.77% is down from 4.63% in March.
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On the monetary policy front, Banxico has telegraphed that a hold at 6.5% on Thursday is all but teed up. A majority of analysts expect it to stay there through 2027.
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- For more, read Bloomberg Economics’ full Week Ahead for Latin America
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—With assistance from Anup Roy, Piotr Skolimowski, Monique Vanek, Beril Akman, Mark Evans, Robert Jameson, Laura Dhillon Kane and Souhail Karam.
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(Adds tout in EMEA section)
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