The Noreen Burke
Investing.com — US inflation data and Federal Reserve minutes will be scrutinized by investors for clues about the near-term path of interest rates. The calm in equity markets will be tested by the start of first quarter earnings by the banks and the update of global growth forecasts by the IMF.
Economists expect core consumer price inflation, which excludes food and fuel costs, to rise by month-on-month, to an annualized increase of , from 5.5% in February.
The inflation data comes on the heels of the latest US jobs report, which highlighted {{news-3050820||persistent tightness}} in the labor market, raising expectations for another rate hike by by the Fed at its May 2-3 policy meeting, following the easing of financial stability risks.
The economic calendar also includes data on retail sales for March: economists expect another drop as high inflation erodes household spending power. Data on initial jobless claims and producer price inflation will be released on Thursday.
In March, Fed policymakers unanimously voted for a ninth interest rate hike, indicating that fighting inflation remains their top priority.
The recent turmoil in the banking sector has heightened fears that aggressive monetary tightening could not only drive the economy into a recession but also trigger more bank failures.
Investors expect rate cuts before the end of the year, but the Fed has said it will keep rates elevated for as long as needed.
Speeches are expected throughout the week from several Fed officials, including New York Fed Chairman John, Philadelphia Fed Chairman Patrick, Minneapolis Fed Chairman Neel, and Richmond Fed Chairman Thomas.
Major banks, including JPMorgan (NYSE:) and Citigroup (NYSE:), to report results on Friday, followed by Goldman Sachs (NYSE:), Morgan Stanley (NYSE:) and Bank of America (NYSE:) the following week.
{According to Reuters, the financial sector is expected to post earnings growth of 5.2% in the first quarter of the year, placing it among the four sectors for which earnings growth is expected. According to Refinitiv’s I/B/E/S data, earnings are expected to fall 5.0%.
The IMF is to publish updated forecasts on global economic growth on Tuesday, amid concerns about high inflation and risks to financial stability.
The G20 group of finance ministers will meet on Wednesday.
Meanwhile, Bank of Japan Governor Haruhiko Kuroda will hand over the baton to Kazuo Ueda on Monday, after a decade at the helm of the bank overseeing unprecedented monetary easing.
Ending massive stimulus could prove more challenging than implementing it, which is why economists expect Ueda to buy time before making major changes. However, investors will be on the alert for any hints of monetary policy during his inauguration speech.
–Reuters contributed to this service