The week ahead: 10 - 14 June 2024

United States – Wednesday marks the release of the highly anticipated May inflation figures. We expect core CPI inflation to stay at 0.3% m/m (3.5% y/y), due to a slowly falling shelter component. Both new and used car prices are expected to stay relatively flat, while inflationary pressures from car insurance premia start to wane. Headline inflation will drop to 0.1% m/m (3.4% y/y) on the back of a strong decline in gasoline prices. Wednesday evening, we expect the FOMC to keep rates on hold. Markets will be looking for an update on the Fed's reaction function in Chair Powell's press conference, the release of the projections and the new dot plot. We expect the distribution to shift more hawkish, with a greater proportion of members writing in a single cut this year, but the majority still writing in two, down from three in March.

Eurozone – Following the first rate cut of this cycle (read our update here), a host of ECB officials are set to speak this week, and markets will be closely watching for hints on the future policy path following the more neutral communication at the GC meeting. In particular, the lone dissenter to the cut Robert Holzman will speak alongside the more dovish Villeroy on Tuesday. Chief Economist Philip Lane is also set to speak on Tuesday and Friday.

Asia – We expect the Bank of Japan (BoJ) to keep its policy rate settings on hold on Friday 14 June, in line with consensus. Still, general expectation is that Governor Ueda will signal further rate hikes, with July being the first real option for the next move. Moreover, it is anticipated that Ueda will announce the start of quantitative tightening (QT), with the BoJ reducing its purchases of Japanese government bonds. We expect the BoJ to continue to move cautiously and gradually, both in terms of hiking the policy rate and QT. Meanwhile in China, we expect CPI inflation to have modestly picked up in May, and the deflation in producer prices to have eased a bit, in line with consensus.