- Federal Reserve officials remain cautious over rate cuts despite market sentiment
- Release of U.S. data expected to offer deeper insights into interest rate trends
- Markets question whether CPI report will bring the BoC closer toward rate cuts
- Bank of England potential rate cuts in the summer
Last Week
Last week's data revealed that April's consumer prices in the U.S. came in less than expected. As a result, markets adjusted their expectations to two rate cuts this year. However, several Federal Reserve officials have expressed caution regarding the timing of potential rate cuts.
The Federal Reserve is expected to await further evidence that inflation is returning to its 2% target before easing policy.
This week, the focus lies on key U.S. data points to be discussed below and the upcoming Personal Consumption Expenditures (PCE) price index, which will be released on May 31, 2024. These reports will provide further insights into the future trajectory of interest rates.
This Week
The U.S.
Statistics Canada will release the Consumer Price Index (CPI) m/m on Tuesday, May 21, at 4:30 PM (Dubai Time). Markets expect a drop, signaling easing inflationary pressures.
The Bank of Canada (BOC) is scheduled to release its Overnight Rate on June 5, with a 40% chance of a 25-basis point cut. If inflation data turns out softer than anticipated, these odds could edge higher, amplifying the likelihood of a rate cut.
Canada
The Consumer Price Index (CPI) m/m is set to be released by Statistics Canada on Tuesday, May 21, 2024, at 4:30 PM, GMT+4 (Dubai Time). The market anticipates a drop, signaling easing inflationary pressures.
The Bank of Canada (BOC) is scheduled to release its Overnight Rate on June 5, 2024, with a 40% chance of a 25-basis point cut. If inflation data turns out softer than anticipated, these odds could edge higher, amplifying the likelihood of a rate cut.
UK
The Consumer Price Index (CPI) y/y is set to be released by the Office for National Statistics on Wednesday, May 22. The market forecasts a significant drop in inflation from 3.2% to a forecasted 2.1%, signaling easing inflationary pressures. Achieving this 2.1% figure would mark the UK's lowest inflation rate since August 2021.
The Bank of England (BOE) has been discussing potential rate cuts this summer. A CPI release aligning with the expectations could prompt the BoE to consider implementing rate cuts earlier than initially planned, potentially before August.
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