(Bloomberg) — Jerome Powell’s remarks next week will be scrutinized by investors for clues about how long the Federal Reserve is willing to wait before cutting interest rates.
Most read on Bloomberg
The last time the US central bank chairman spoke, he signaled that policymakers were likely to keep borrowing costs high for longer than expected, underscoring the lack of further progress in reducing inflation and the lasting strength of the labor market.
The latest price data, which showed stubborn underlying inflation, as well as expectations for a strong jobs report on Friday, are unlikely to cause the Fed chief to change his mind.
Powell will speak to reporters after the Fed’s rate decision on Wednesday, with the central bank expected to keep borrowing costs at a more than two-decade high. Expectations for rate cuts have been pushed back to 2024, and investors are now betting on up to two cuts by the end of the year.
The week will be capped by the monthly jobs report, offering a new look at the state of the U.S. labor market. Economists expect nonfarm payroll growth to slow to a still-high pace in April amid stable, low unemployment.
What Bloomberg Economics says:
“We expect Powell to take a hawkish turn. At a minimum, it will likely indicate that the median FOMC participant now expects “fewer” cuts this year. In a more hawkish direction, he could hint at the possibility of no cuts – or even suggest that an increase could be considered, even if it is not the current baseline.”
—Anna Wong, Stuart Paul, Eliza Winger and Estelle Ou, economists. For a full analysis, click here
We will also receive updates on a closely watched, quarterly measure of employment costs, as well as monthly figures on job openings and the manufacturing sector.
Looking north, Canada’s gross domestic product data for February could show a slight boost to the economy, giving the Bank of Canada options as it considers when to adopt more policy flexible.
Elsewhere, euro zone data could show that inflation has stopped slowing and the economy has started to grow again, while Chinese surveys will highlight the strength of the expansion there. Central banks from Norway to Colombia will set rates, while the Paris-based OECD will release new global forecasts on Thursday.
Click here to find out what happened last week and below you’ll find our summary of what’s happening in the global economy.
Asia
China highlights prospects for first-quarter economic expansion with the release of official Purchasing Managers’ Index data on Tuesday. The report will show whether manufacturing activity increased for a second month in April.
There may be some seasonal slowdown resulting from fewer business days, but the overall direction will likely point to a continued recovery, according to Bloomberg Economics. The same day the Caixin gauge is expected, which has been oscillating above the threshold of 50 which separates expansion and contraction for five months.
Global trade will be in the spotlight as Australia,…
