World stock markets edged higher on Monday as investors awaited key inflation data releases this week. This data could influence central bank decisions, with a potential European rate cut as soon as next week and a U.S. policy easing later this year.
Focus is on core personal consumption expenditures (PCE) data in the U.S., the Federal Reserve’s preferred inflation gauge. While a slight increase is expected, some analysts believe it may not warrant a rate hike until later in 2024. The uneven U.S. economic recovery, with a slowing manufacturing sector but resilient services, adds to the complexity.
In contrast, the European Central Bank (ECB) is expected to ease policy next week despite forecasts of slightly higher inflation in the eurozone. Several ECB policymakers have signaled a coming rate cut, and markets currently price in an 88% chance of a reduction on June 6th.
The Bank of Canada may also follow suit with an easing next week, while the U.S. Federal Reserve is likely to wait until September before making any adjustments. This week will see comments from several Fed officials, including influential figures like New York Fed President John Williams.
Source: Reuters