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(Bloomberg) — The Federal Reserve’s first-line inflation gauge is about to show some modest relief from stubborn price pressures, corroborating central bankers’ prudence about the timing of interest-rate cuts.

Economists expect the personal consumption expenditures price index minus food and energy — due on Friday — to rise 0.2% in April. That would mark the smallest advance so far this year for the measure, which provides a better snapshot of underlying inflation.

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The overall PCE price index probably climbed 0.3% for a third month, according to median projection in a Bloomberg survey. Increases this year stand in contrast to relatively flat readings in the final three months of 2023, underscoring uneven progress for the Fed in its inflation fight.

Fed Chair Jerome Powell and his colleagues have stressed the need for more evidence that inflation is on a sustained path to their 2% goal before cutting the benchmark interest rate, which has been at a two-decade high since July.

The PCE price measure is seen rising 2.7% on an annual basis, while the core metric is expected at 2.8% — both matching the prior month’s levels. 

Officials earlier this month coalesced around a desire to hold interest rates higher for longer and “many” questioned whether policy was restrictive enough to bring inflation down to their target, according to minutes of their last meeting. 

Read more: Minutes Show Officials Rallying Around Higher-for-Longer Rates

The latest inflation numbers will be accompanied by personal spending and income figures. While demand grew at a solid pace in the first quarter, the data will inform on services spending after flat retail sales in April previously reported. 

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What Bloomberg Economics Says:

“The report will likely provide some encouraging signs that the disinflation process hasn’t completely stalled. With income growth slowing in a cooling labor market, consumers are gradually cracking, which should provide a continued disinflationary impulse in the rest of the year. Yet, with catch-up price pressures still in the pipeline, inflation will likely moderate only very gradually this year.”

—Anna Wong, Stuart Paul, Eliza Winger and Estelle Ou, economists. For full analysis, click here

Other data for the week include revised first-quarter gross domestic product on Thursday. Economists forecast growth probably cooled from the government’s initial estimate. The Fed on Wednesday will issue its Beige Book summary of economic conditions around the country.

Among the US central bankers speaking during the holiday-shortened week are John Williams, Lisa Cook, Neel Kashkari and Lorie Logan.

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

Looking north, Canada will release gross domestic product data for the first quarter. Waning monthly momentum in March and weak domestic demand would likely keep a June rate cut in play for the central bank.

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Elsewhere, a likely pickup in euro-zone inflation, Chinese industrial data and PMI numbers, and price reports from Brazil will be among the highlights. 

Click here for what happened in the past week and below is our wrap of what’s coming up in the global economy.

Asia

China’s manufacturing sector is in the spotlight in the coming week. Industrial data Monday will show whether profits bounced back in April after a sharp retreat in March dragged the pace of gains for the first three months to 4.3%. 

Persistent deflation in producer-gate prices and soft domestic demand may keep profitability under pressure. China gets its official manufacturing PMI data on Friday, with the focus on whether the gauge stays above the 50 threshold that separates contraction from expansion for a third month in May. 

Also on Friday, Japan’s industrial output growth is seen slowing while retail sales chug along in April. 

Consumer inflation in Tokyo may pick up a bit in May, foreshadowing gains for the national figures. 

Australia’s consumer price growth is forecast to slow to 3.3%, still hot enough to keep the Reserve Bank of Australia on hold. 

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Vietnam also reports CPI data, along with industrial output, retail sales and trade during the week. 

In central banking, Kazakhstan sets its benchmark policy rate on Friday.

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

Europe, Middle East, Africa

In the euro zone, inflation probably accelerated in May to 2.5%, according to economists’ forecasts. An underlying gauge is anticipated to have stopped weakening for the first time since July, holding at 2.7%.

In tune with the wider euro-zone data, national releases that start with Germany’s on Wednesday are expected to have gone the wrong way in three of the region’s four biggest economies. Only Italy is seen to be experiencing slower price growth.

Such outcomes impede progress toward the ECB’s 2% target, but officials’ consistent signals for a quarter-point rate reduction on June 6 make it unlikely that one month of data will derail them. Even so, some policymakers are arguing against any rush to ease further. 

“The probability is increasing that in 13 days we will see the first rate cut,” Bundesbank President Joachim Nagel, a policy hawk, said in an interview on Friday. “If there’s a rate cut in June, we have to wait, and I believe we have to wait till maybe September.” 

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Other reports in the euro-zone include Germany’s Ifo business confidence index on Monday, the ECB’s survey of inflation expectations on Tuesday, and economic confidence on Thursday.

ECB officials scheduled to speak in the coming week include chief economist Philip Lane and the Dutch, French and Italian governors. A pre-decision blackout period kicks in on Thursday. 

The Bank of England has already gone silent, cancelling all speeches and public statements by policymakers during the campaign before the UK general election on July 4. 

Among other European central banks, a financial stability report from Sweden’s Riksbank on Wednesday, and a speech in Seoul by Swiss National Bank President Thomas Jordan will be among the highlights. 

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

Several monetary decisions are scheduled in the wider region: 

• Israel’s central bank is expected to keep its base rate steady at 4.5% on Monday, largely to keep war-related inflationary pressures in check and provide support to the shekel. Governor Amir Yaron is wary of easing monetary policy and further widening the gap between borrowing costs in Israel and the US.
• Ghana’s monetary authority is set to leave its key rate at 29% on Monday to vanquish sticky inflation and support its floundering currency.
• On Wednesday, Mozambique’s policymakers are poised to cut borrowing costs, with consumer-price growth expected to remain in the single digits for the rest of the year.
• And on Thursday — a day after elections where the ruling African National Congress risks losing its majority — South African monetary officials are predicted to maintain their key rate at 8.25%, with inflation yet to return to the 4.5% midpoint of their target range.

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Latin America

Brazil in the coming week reports the mid-month reading of its benchmark consumer price index along with the May reading of its broadest measure of inflation.

The combination of Brazil’s tight labor market and weaker currency likely limit the scope for further disinflation from current levels, with inflation already running near consensus year-end forecasts.

The IPCA-15 price index fell back below 4% last month after jumping over 5% in September — which came just two months after hitting 3.19%, below the central bank’s 2023 target.

Also in Brazil, the central bank on Monday posts its weekly survey of economists, whose inflation expectations and interest rate forecasts are rising again, along with national unemployment, total outstanding loans, and budget balances.

Chile posts six separate indicators for April, with the highlights being joblessness, retail sales, industrial production and copper output.

Mexico’s light schedule will be dominated by the central bank’s publication of it quarterly inflation report, followed by a press conference hosted by Governor Victoria Rodriguez.

Banxico earlier this month marked up its inflation forecasts through the third quarter of 2025, while Wednesday’s report will reveal the bank’s revised GDP forecasts.

On Thursday, Mexico’s April labor market data are due. The early consensus sees the unemployment rate rising from the record low of 2.28% posted in March.

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

—With assistance from Robert Jameson, Piotr Skolimowski, Monique Vanek and Laura Dhillon Kane.

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