(Bloomberg) — Things are getting awkward for the Federal Reserve.
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With their eye on inflation, officials are inclined to hold rates steady when they meet in Washington on Tuesday and Wednesday. But fears of a slowdown are mounting, and President Donald Trump and some of his deputies keep hammering the central bank for an interest-rate cut.
Caught in that bind, Fed Chair Jerome Powell may have been comforted by government data on Friday showing a healthy 177,000 jump in April payrolls. As long as the labor market holds firm, the Fed can more easily justify standing pat.
Meanwhile, the Fed’s favored inflation gauge showed price pressures continued to slowly ease. While Powell & Co. would typically welcome such a cooling, higher US duties on imports risk upending the progress they’ve made on inflation.
In an interview on NBC’s Meet the Press with Kristen Welker that aired Sunday, Trump insisted he doesn’t plan to fire Powell despite his sustained criticism over the pace of rate cuts.
Indeed, uncertainty is the dominant factor now for major central banks around the world. The White House is pursuing deals on the tariff front that could once again shift the landscape, a nightmare for anyone trying to forecast future economic conditions.
What Bloomberg Economics Says:
“We expect Powell to push back against market pricing and signal a renewed priority on price stability. Officials like Richmond Fed President Thomas Barkin and Fed Governor Adriana Kugler have voiced concerns that inflation expectations may be loosening. Add to that the solid April payroll print and there’s little pressure for a near-term cut.”
—Anna Wong, Stuart Paul, Eliza Winger, Estelle Ou and Chris G. Collins.
The European Central Bank has continued to cut rates in anticipation of continued disinflation and weaker growth caused by US tariffs. But euro-area inflation unexpectedly held steady in a report released on Friday, while an underlying measure jumped.
Another illustration of the fog of the trade war: The Bank of Canada in April abandoned its usual practice of releasing a base-case forecast. Instead, it issued two potential — and very different — scenarios that hinge on how Canada’s tariff dispute with the US turns out.
The US economic data calendar is light in the coming week. On Monday, the Institute for Supply Management issues its April services index. Economists will then focus on jobless claims data for any signs layoffs are becoming more pronounced. Initial applications in the week ended April 26 jumped to the highest since February, largely due to a spring recess-related surge in New York filings.
In Canada, newly elected Prime Minister Mark Carney is set to meet Trump within the week, and will also start assembling a cabinet.
Jobs data may show continued weakness, merchandise trade numbers for March will reflect tariffs, and the Bank of Canada’s financial stability report will offer insight into the capacity of businesses and households to weather a potential recession.
Elsewhere, several monetary decisions are scheduled, with rate cuts anticipated in the UK and Poland, a hike in Brazil, and no change in Sweden and Norway.
Click here for what happened in the past week, and below is our wrap of what’s coming up in the global economy.
The region will see data on factory or services activity from a number of countries, including China, Japan, Singapore and India, providing early insight into the impact of Trump’s tariffs.
The week kicks off with Pakistan’s rate decision as tensions with neighboring India escalate.
On the same day, Singapore publishes retail sales for March, while figures from Indonesia will likely show the economy there contracted in the first quarter.
The following day, China publishes the Caixin activity report for April at a time when measures across Asia are showing a sudden worsening because of Trump’s trade war. Vietnam has a flurry of data on tap, from inflation to trade and retail sales, while Australia — where elections on Saturday saw the incumbent center-left Labor Party returned to power with an increased majority — reports building approvals.
On Wednesday, New Zealand and the Philippines will publish employment reports, while data from Thailand will show consumer prices likely eased further in April.
Malaysia’s central bank is set to leave interest rates unchanged on Thursday at 3%, while first-quarter data will likely show the Philippines economy maintained its momentum in the new year.
On Friday, all eyes will be on China’s trade data for April, the first month since US “Liberation Day” tariffs were imposed and Beijing retaliated.
Another key set of data comes from Japan, where investors will focus on real wages after they fell for a second straight month in February. South Korea reports its balance of payments, while Indonesia has consumer confidence data. Finally, investors will keenly watch China’s inflation data on Saturday.
Meanwhile, Chinese companies listed in Hong Kong are bringing forward dividend payments to the second quarter, a move that may smooth out yuan volatility over the year.
The Bank of England is widely expected to cut borrowing costs on Thursday. Armed with forecasts that take account of Trump’s tariff onslaught, officials will probably ease despite price pressures that have kept inflation noticeably above 2%.
Investors will then parse Governor Andrew Bailey’s remarks, with observers currently anticipating UK policymakers stay on a slow but steady pace of one rate cut per quarter.
Nordic central bank decisions the same day may show officials in a wait-and-see mode:
Sweden’s Riksbank is widely expected to keep its rate at 2.25% for a second meeting. Inflation has stayed elevated even as a growth indicator showed likely stagnation in the first quarter. With economists cutting back forecasts for expansion, expectations are building for a quarter-point rate cut later this year.
In Norway, central bankers are also anticipated to refrain from a rate move, in line with their March projection for just two cuts this year, most likely starting in September. Governor Ida Wolden Bache has said that not all of a recent inflation pickup looks temporary. The nation has little direct trade exposure to the US, but officials worry about the knock-on effects of a global tariff war.
Monetary announcements are scheduled across Eastern Europe:
Poland’s central bank is poised to lower borrowing costs on Wednesday for the first time in 19 months. That follows a shock pivot toward easing from Governor Adam Glapinski that may deliver a rate cut less than two weeks before the nation’s May 18 presidential election.
The following day in Prague, Czech policymakers could enact their final cut for the cycle. Czech National Bank Deputy Governor Eva Zamrazilova raised that prospect in an interview on Monday, and Governor Ales Michl struck a similar tone.
A Serbian decision is scheduled for Thursday after officials kept borrowing costs unchanged for a seventh month in April after sticky inflation and months of political protests.
African decisions are also on the calendar:
On Wednesday, Mauritius is set to leave its key rate at 4.5% to contain price pressures amid uncertainty over US tariffs.
A day later, Uganda’s central bank will likely cut borrowing costs. Inflation remains below its 5% target and the shilling has been largely steady since mid-April.
Monetary policy will be a focus of the Reykjavík Economic Conference at the end of the week. The BOE’s Bailey and several other central bankers from the US to China and South Africa will be there.
The ECB Governing Council holds its annual retreat in Porto, Portugal, on Tuesday and Wednesday, with the central bank’s strategy review on the agenda.
In euro-zone data, industrial numbers may draw attention, with production data due from France, Germany and Spain, along with German factory orders.
Swiss data on Monday could show inflation at a four-year low, and central bank chief Martin Schlegel speaks the following day. Consumer-price numbers are also due from Sweden, Norway and Hungary.
Turkey releases April inflation on Monday. A steady annual outcome of 38% is expected, although monthly price growth is likely to have increased after the arrest of Istanbul’s mayor led to a sharp depreciation in the lira against the dollar.
Market readouts are on tap from Argentina’s central bank, Citi’s local unit in Mexico, and Brazil’s central bank, with its weekly Focus survey of economists.
The good news for Banco Central do Brasil ahead of its May 6-7 meeting is that inflation expectations appear to be finally leveling off.
The bad news is they’re still running at alarmingly elevated levels. Analysts see BCB plumping for a half-point rate increase, to 14.75%, on Wednesday. On Friday, the early consensus has April consumer price data showing a move up from the prior month’s 5.48%.
Peru’s central bank, unlike Brazil’s, doesn’t have an inflation issue, and its economy isn’t in need of stimulus. The consensus has chief Julio Velarde and colleagues holding at 4.75% for a fourth meeting.
Colombia’s central bank, meanwhile, offers up its quarterly monetary policy report on Monday, featuring updated forecasts and scenario analyses.
BanRep on Tuesday posts the minutes of its April 30 meeting, where officials delivered a surprise quarter-point cut, to 9.25%. The median estimate of economists surveyed by the central bank see another 250 basis points of easing this year and next.
In addition to Brazil, Mexico, Colombia and Chile will publish April consumer prices reports.
Chile and Colombia may see moderate disinflation, while Brazil and Mexico are likely to see consumer prices ticking higher — in Mexico’s case, breaching the 4% top of the central bank’s target range.
—With assistance from Laura Dhillon Kane, Monique Vanek, Mark Evans, Ott Ummelas, Philip Aldrick, Robert Jameson, Swati Pandey, Vince Golle and Beril Akman.
