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(Bloomberg) — Investors may glean more on the Federal Reserve’s resolve to ease monetary policy when US policymakers update their forecasts for interest rates Wednesday for the first time in three months.

The central bank — led by Chair Jerome Powell — is widely expected to hold borrowing costs steady for a seventh consecutive meeting, but there’s less certainly on officials’ rate projections. 

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A 41% plurality of economists expect the Fed to signal two cuts in the closely watched “dot plot,” while an equal number expect the forecasts to show just one or no cuts at all, according to the median estimate in a Bloomberg survey.

After raising their benchmark federal funds rate more than five percentage points starting in March 2022, the Federal Open Market Committee has held borrowing costs at a two-decade high since July. 

A host of Fed leaders have suggested in recent weeks they see no rush to cut rates, with inflation more persistent and the outlook for growth staying solid. 

What Bloomberg Economics Says:

“The June FOMC meeting will be one of the most pivotal this year as Powell may provide the clearest hint yet to the rate-cut timetable. The new dot plot likely will indicate two 25-basis-point cuts this year, compared with three in the March version.

With growth indicators consistently surprising to the downside since the April 30-May 1 meeting — even as inflation data have met expectations — we expect Powell to sound relatively dovish in his news conference.”

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—Anna Wong, chief US economist. For full analysis, click here

Inflation by the Fed’s preferred measure was 2.7% in the year ended April, compared to the central bank’s 2% target. Data released Friday showed a surge in payrolls last month as well as accelerating wages, prompting traders to dial back expectations on rate cuts this year.

“The Fed will opt to keep rates steady for longer,” said Thomas Simons, senior US economist at Jefferies. “They will want to see a renewed run of more favorable data in line with an inflation trend closer to 2% before they feel comfortable cutting rates.”

• For more, read Bloomberg Economics’ full Week Ahead for the US

In Canada, fresh from becoming the first central banker in the Group of Seven to launch into an easing cycle, Bank of Canada Governor Tiff Macklem will speak at a conference in Montreal. 

Elsewhere, a Bank of Japan decision that may pare back bond buying, inflation data from China to Sweden, and crucial UK wage numbers will be among the week’s highlights.

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

The BOJ grabs the spotlight Friday when its board concludes a two-day meeting with a policy decision. 

While the bank is expected to hold its short-term rate steady, people familiar with the matter have said officials may discuss whether to reduce bond purchases. 

That’s a step that could support the yen if Japan’s long-term interest rates nudge higher, narrowing the yield differential with US Treasuries. 

The BOJ meets after the government releases revised growth data for the first quarter on Monday that are likely to confirm the economy contracted for a second time in three quarters.

Elsewhere, the State Bank of Pakistan is seen cutting its benchmark rate by a full percentage point on Monday after consumer inflation slowed considerably in May. Central banks in Thailand and Taiwan also meet this week. 

In data, China’s consumer inflation is projected to accelerate a tad to 0.4% year on year in May, while factory-gate deflation may slow to 1.5%, the smallest drop in prices since February 2023. 

India also gets price statistics along with industrial production, while Malaysia publishes April manufacturing sales value and industrial output. 

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Trade numbers are due from the Philippines and India, and Australia releases NAB business conditions and confidence figures Tuesday, followed by a raft of labor data on Thursday. 

• For more, read Bloomberg Economics’ full Week Ahead for Asia

Europe, Middle East, Africa

The UK offer some data highlights in the coming week. On Tuesday, labor-market numbers may show an uptick in pay growth in the three months through April, with an annual 6.1% increase anticipated by economists. Such an outcome is likely to add to the case for the Bank of England to avoid a rate cut this month.

In numbers on Wednesday meanwhile, gross domestic product probably failed to rise in April for the first time this year, with both manufacturing and services expected to have suffered declines on the month that signaled a poor start to the second quarter. 

With the UK election campaign in full swing, BOE officials will keep to a self-imposed quiet period in coming days.

Over in the euro zone, industrial production data on Monday is anticipated to show the smallest increase in three months, suggesting that the region also began the second quarter on a weak footing.

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In the wake of their rate cut last week, European Central Bank officials scheduled to speak this week include governors from Germany and France, Chief Economist Philip Lane, Vice President Luis de Guindos and ECB President Christine Lagarde. 

Investors will also have an eye on European Parliament elections, results of which are set to be published late on Sunday.  

What Bloomberg Economics Says…

“In the next parliament, the EU will have to take action to tackle the productivity gap that has opened up with the US economy — failing to do so would put its position as a major global player at risk. It must strike a balance between fiscal sustainability and investing for a greener, more prosperous future. And it will have to decide where it stands on trade policy and defense at a moment of extreme geopolitical uncertainty.”

—Jamie Rush and Simona Delle Chiaie. Read the full research here

Looking south, Saudi Arabian GDP data on Sunday will give an updated view after an initial estimate that the kingdom’s economy shrank 1.8% in the first three months of the year, the third consecutive quarterly contraction. 

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The non-oil economy — a priority for the government — grew by 2.8% year-on-year during the first quarter, also easing from higher levels during previous quarters.

On Thursday Kenya’s Treasury Secretary Njuguna Ndung’u will deliver the East African nation’s budget for the year through June 2025. He’s expected to elaborate on plans for the country at high risk of debt distress to achieve its lowest fiscal deficit in 15 years by containing spending, trimming borrowing and aggressive tax measures.

• For more, read Bloomberg Economics’ full Week Ahead for EMEA

Meanwhile several consumer-price reports for May will be published throughout the wider region:

• Norwegian inflation on Monday is expected to slow, but still stuck above 3%.
• Investors will watching closely for any easing in Ghana’s data due on Wednesday. The price measure has been sticky, averaging 24% so far this year.
• On Friday meanwhile, economists expect Israel’s inflation quickened to 3.2%, from 2.8% a month earlier.
• The same day, Russian data may show consumer-price growth topped 8%, double the central bank’s target, as price pressures continue to build in an economy overheated by President Vladimir Putin’s war in Ukraine.
• Sweden will release numbers then too. The annual consumer-price measure tracked by the Riksbank is anticipated to weaken close to 2%.

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Latin America

In Brazil, the central bank’s survey of analysts posted Monday may show further erosion of inflation expectations for 2024-2026 as well as the May reading.

Notably, analysts last week raised their 2024 estimate for the key rate by a quarter point to 10.25% — up from 9% in April — adding to speculation that the bank will hold at 10.5% this month.

The May consumer prices report out Tuesday will likely show the first acceleration in eight months from April’s 3.69%. On Thursday, Brazil’s statistics agency posts April retail sales data.

In Colombia, the early consensus expects that inflation ticked up ever so slightly in May, its first move up in 14 month. Also on the schedule are April reports on industrial production, manufacturing and retail sales.

Argentina’s monthly inflation likely slowed for a fifth month in May from 8.8% in April. Analysts surveyed by the central bank see a 5.2% print, implying an annual rate of 279.6%, down from April’s 289.4% reading.

In Peru, one of the world’s longest serving central bankers has finally gotten inflation back to target: Julio Velarde, who has helmed the bank for almost 18 years, goes into Thursday’s rate meeting with consumer prices back at the 2% target. Look for a quarter-point cut to 5.5%.

• For more, read Bloomberg Economics’ full Week Ahead for Latin America

—With assistance from Tony Halpin, Robert Jameson, Laura Dhillon Kane, Brian Fowler, Piotr Skolimowski, Monique Vanek, David Herbling and Abeer Abu Omar.

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