Central Banks Remain Cautious on Interest Rate Cuts

Central banks are expected to reveal their positions on interest rate cuts this week, with decisions from advanced economies anticipated. Following the Federal Reserve’s recent easing projections, policymakers from the UK to Australia remain cautious about reducing borrowing costs due to inflation concerns.

In addition to central bank decisions, investors will focus on U.S. retail sales, Chinese economic data, and inflation figures from the UK and Japan. In the U.S., reports on consumer demand, housing, and industrial production will be crucial after recent signs of moderating inflation. Fed officials will discuss these issues, with Minneapolis Fed President Neel Kashkari stressing the importance of monitoring data before cutting rates.

The Bank of England is likely to delay rate cuts until at least August, influenced by upcoming elections and price pressures. Central banks in Australia and Norway are also in no rush to reduce rates, and many economists predict the Swiss National Bank may hold off on further cuts after its move in March.

June was initially expected to mark the start of global rate cuts, but hesitancy prevails. Canada initiated the first cut among the Group of Seven on June 5, but the European Central Bank’s cut, paired with a higher inflation forecast, showed limited enthusiasm for further easing.

This week’s decisions will reflect the varying stages of global monetary policies. Brazil and Paraguay are expected to maintain current borrowing costs, while Chile may slow its rate cuts. Bloomberg Economics suggests major central banks will likely keep interest rates unchanged despite earlier indications of possible cuts.

U.S. retail sales figures on Tuesday are expected to show increased consumer engagement in May. Separate data is anticipated to indicate growth in industrial production. Housing starts data on Thursday may reveal a slight rise in May construction, while existing home sales figures on Friday are projected to show a continued decline due to limited listings and higher mortgage rates.