PCE Data this Friday
The Personal Consumption Expenditures index (PCE), which is the Federal Reserve’s preferred inflation measure, is set to be released on Friday. It is being closely watched to make predictions about interest rates for the rest of the year.
The data was released in a situation where markets are gradually accepting higher interest rates for a long time following last week’s FED reports, along with somewhat cautious comments from policymakers expressing skepticism about whether inflation is actually following a sustainable downward path to the desired threshold of 2%.
Lane from ECB indicates Central Bank is ready to start cutting interest rates – FT
ECB’s Chief Economist Philip Lane told the Financial Times that the European Central Bank may begin to reduce interest rates from the record high of 4% at its upcoming policy meeting next week.
He said that: “barring major surprises, at this point in time there is enough in what we see to remove the top level of restriction.”
Although such a move will repeat such cuts by central banks in countries like Switzerland and Sweden, it would precede cuts by other major economies. The Fed and the Bank of England are not expected to cut rates until the end of this year, and investors are betting that the Bank of Japan might continue raising interest rates.
Economists predict that May inflation data for the eurozone on Friday, will show prices rising at a faster annual rate compared to the previous month, while the core figure is expected to remain at the same pace as last year.
Dollar steady ahead of global inflation data
The dollar has reduced again after data showed consumer price growth slowed in April and confirmed this trend could pull it lower – but the big picture is that inflation and inflation indicators remain above the Fed’s 2% target.
, which is the Federal Reserve's preferred inflation measure, is set to be released on Friday.){kind=link}