By Noreen Burke
Investing.com -- U.S. inflation data and Federal Reserve minutes will be scrutinized by investors for clues on the near-term path of interest rates. The uneasy calm in equity markets will be tested as banks kick off first quarter earnings and the IMF is to release updated global growth forecasts.
- U.S. CPI
March inflation figures on Wednesday will be closely watched to see if price pressures have eased enough to dampen the Federal Reserve’s appetite for further aggressive rate hikes.
Economists expect core consumer price inflation, which excludes food and fuel costs, to rise 0.4% on a month-over-month basis, for an annual increase of 5.6%, up from 5.5% in February.
The inflation data is coming on the heels of the latest U.S. jobs report which pointed to persistent tightness in the labor market, adding to bets for the Fed to hike rates again at their May 2-3 policy meeting as risks to financial stability ease.
The economic calendar also features March retail sales data on Friday, with economists expecting another decline as elevated inflation erodes households’ spending power. Reports on initial jobless claims and producer price inflation will be released on Thursday.
- Fed minutes
The Fed is to publish the minutes of its March meeting on Wednesday which will be scrutinized for clues about the appetite for further policy tightening as well as officials’ views on the health of the financial system.
Fed policymakers voted unanimously to raise interest rates for the ninth straight time in March, indicating that combating inflation remains their top priority.
Recent turmoil in the banking sector has added to fears that aggressive monetary tightening could not only tip the economy into recession but that it could trigger more bank failures.
Investors are pricing in rate cuts before year-end, but the Fed has said they will keep rates at a high level for as long as it takes.
Several Fed officials are also due to make appearances during the week, including New York Fed President John Williams, Philadelphia Fed President Patrick Harker, Minneapolis Fed President Neel Kashkari and Richmond Fed President Thomas Barkin.
- Bank earnings
Investors will get an update on the health of the U.S. banking sector following last month’s crisis triggered by the collapse of two mid-sized lenders as financials kick off first quarter earnings season.
Major banks including JPMorgan (NYSE:JPM) and Citigroup (NYSE:C) are due to report on Friday, followed by Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS) and Bank of America (NYSE:BAC) the week after.
S&P 500 financials are seen posting first quarter year-on-year earnings growth of 5.2%, putting it among just four sectors whose earnings are expected to climb, Reuters reported. S&P 500 earnings are predicted to fall 5.0%, I/B/E/S data from Refinitiv showed.
- IMF forecasts
Central bankers and finance ministers will gather in Washington on Monday as the World Bank and the International Monetary Fund kick off their Spring meeting.
The IMF is to publish its updated global economic growth forecast on Tuesday against a background of concerns over high inflation and risks to financial stability.
The G20 group of finance ministers is to hold talks on Wednesday.
- Central banks
The Bank of Canada is to hold its latest policy setting meeting on Wednesday and is widely expected to leave rates unchanged again having indicated that rates are already likely at the peak despite continued signs of strength in the economy.
Meanwhile, Bank of Japan Governor Haruhiko Kuroda passes the baton to Kazuo Ueda on Monday after a decade at the helm overseeing unprecedented monetary easing.
Winding down hefty stimulus may prove more challenging than putting it in place, which is why economists generally expect Ueda will take his time before making major changes. Still, investors will strain their ears for policy hints at his inauguration speech.
--Reuters contributed to this report