The latest data from the Commerce Department is expected to show a cooling of the Federal Reserve’s preferred inflation metric, the core personal consumption expenditures price index. This index, which excludes volatile food and energy costs, is projected to have risen by 2.6% in the year through January. Overall PCE inflation is also expected to have eased on an annual basis, according to economists surveyed by Bloomberg.
The decline in inflation is likely to come from categories that were relatively tame in separate wholesale inflation data. However, components that saw strong increases in the consumer price index will keep the PCE running above the Fed’s 2% target. This cautious approach by policymakers is a key reason why interest rates are expected to remain unchanged.
In addition to the PCE report, the Commerce Department will also release the latest goods-trade balance data. This will be closely watched, especially in light of President Donald Trump’s focus on trade issues. Other economic data scheduled for release include new-home sales, consumer confidence, and the government’s second estimate of fourth-quarter growth.
Meanwhile, investors will be keeping an eye on Trump’s trade policies and Elon Musk’s efforts to reduce the size of the federal government. The upcoming week will also see gross domestic product data for the fourth quarter in Canada, which is expected to show an economy picking up steam following aggressive rate cuts.
In the global economy, there are several key events to watch. The Bank of Korea will make a decision on interest rates, with expectations for a possible rate cut to support domestic demand. The Bank of Thailand is also expected to hold its benchmark rate, while the Reserve Bank of Australia will receive consumer inflation data. In Europe, all eyes will be on Germany’s election results and inflation data from major eurozone economies.
In Latin America, Mexico’s consumer prices report and unemployment rate data will provide insights into the region’s economic health. Chile will release end-of-month data for January, showcasing the economy’s performance. Argentina will close out 2024 with GDP-proxy readings, while Brazil’s economic reports for December suggest a cooling off of the economy.
Overall, the global economy continues to face uncertainties and challenges, with policymakers and investors closely monitoring economic data and geopolitical developments for guidance on future actions.
