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Global Economy Week Ahead: U.S. CPI and Retail Sales; Fed and BOE Meetings

11 Jun 2017 7:00 pm
By WSJ Staff 

Wednesday will be busy in the U.S., with data on consumer prices and retail sales due, followed later in the day by a Federal Reserve monetary-policy decision. The Bank of England also meets to set policy this week, just days after the U.K. election caused new political turmoil.

WEDNESDAY: Economists surveyed by The Wall Street Journal expect U.S. retail sales increased 0.1% in May from the prior month. The April report from the U.S. Commerce Department showed a 0.4% gain in consumer spending despite weak earnings at large brick-and-mortar retailers, as households boosted their spending in other areas.

The U.S. Labor Department's consumer-price index rose a seasonally adjusted 0.2% in April from the prior month, but the annual increase slowed for the second straight month, to 2.2%. The lower trajectory for inflation has raised concerns for the Fed as it weighs further interest-rate increases this year. Economists surveyed by WSJ forecast CPI was unchanged in May from the prior month.

May industrial production figures from China (release time is Tuesday evening in the U.S.) are forecast to show growth of 6.4% year on year. This compares with April's 6.5% expansion, which would signal that the world's second-largest economy is slowly losing steam. Still, economists expect fixed-asset investment, a gauge of construction activity that will be released at the same time, to show a rise of 9% on year for the January-May period -- compared with an 8.9% annual increase over the first four months of the year.

Economists almost unanimously expect the Fed's interest-rate-setting committee to announce an increase in short-term interest rates, but they are split over when it will raise rates after that. Fed officials must weigh mixed economic signals, such as a strengthening labor market coupled with softening inflation. The central bank will release updated economic projections, and Fed Chairwoman Janet Yellen will speak at a press conference following the meeting. The communications will be watched for any details on the Fed's planned timing for shrinking its $4.5 trillion holdings of bonds and other assets.

THURSDAY: The Bank of England could be more inclined to maintain its loose monetary policy for now following Thursday's surprising U.K. election results, in which Conservatives came up short of a majority in Parliament, creating political uncertainty and complicating Brexit talks.

The Swiss National Bank is expected to keep its deposit rate unchanged at minus 0.75% while reiterating its longstanding view that the Swiss franc is "significantly overvalued." The franc's value is key to Switzerland's export-dependent economy, and the SNB has struggled for years to keep it from strengthening too much.

A number of other central banks will set monetary policy this week, including Turkey's (Thursday), Russia's (Friday) and Japan's (Friday local time).

(END) Dow Jones Newswires

June 11, 2017 15:00 ET (19:00 GMT)

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