Fed and BOE Stay Guarded After 100 Days of Iran War

(Bloomberg) — For several global central banks, the question of whether the Iran war poses more of an immediate danger to inflation or to growth is likely to remain open in the coming week.

Officials responsible for monetary policy in seven of the world’s most-traded currency jurisdictions are mostly anticipated to keep settings steady again.

A well-flagged rate hike from the Bank of Japan to continue its exit from low borrowing costs and a close call in Norway are likely exceptions, but the US Federal Reserve and its peers from the UK to Sweden are widely expected to make no changes.

The urge to wait longer to gauge the impact of a conflict whose duration just surpassed 100 days may be reinforced by US President Donald Trump’s efforts to secure a peace deal with Iran. That process will play out against the backdrop of his expected attendance at a summit of the Group of Seven in France on Monday.

But a sense of divergence within the club of advanced economies is already crystallizing after the European Central Bank on Thursday delivered its first interest-rate increase since 2023.

Peers in Norway and Australia have already raised rates, although they’re seen likely to feel no urgency to do so again. Meanwhile, the Swiss National Bank, whose policy is impacted by safe-haven flows into the franc, will probably keep its own rate at zero.

In all, more than 20 central banks accounting for upwards of 40% of world output between them are slated to make rate decisions, pointing to how the week may largely bookend the first half of 2026. Among the highlights further afield, officials in Brazil and Russia may cut borrowing costs, while a Czech hike could also materialize.

Elsewhere, Chinese data covering sectors from retail to industry, Japanese inflation, a vote in Switzerland on a possible population cap, and a summit of European Union leaders in Brussels will be among the highlights.

Click here for what happened in the past week, and below is our wrap of what’s coming up in the global economy.

US and Canada

The Fed gathers on June 16-17 for the first meeting to be overseen by the new Chairman Kevin Warsh, who was previously a Fed governor from 2006 to 2011. Officials are widely expected to keep borrowing costs steady, but the outlook is less clear.

On the heels of a stronger-than-expected jobs report, US inflation rose in May at the fastest pace in more than three years. If those price pressures persist, policymakers may have to consider raising rates.

Officials will scrutinize an array of data, including consumer spending. American shoppers have proved resilient, though with prices now rising faster than wages, they’re coming under increasing pressure.

Data out Wednesday is expected to show retail sales rose 0.5% in May. While the figures aren’t adjusted for inflation, such a reading would suggest consumers are holding up in the face of higher prices at the gas pump and the grocery store. Other data on the schedule includes industrial production on Monday and housing starts on Tuesday.

What Bloomberg Economics Says:

“The FOMC will almost certainly leave rates unchanged at its June 16–17 meeting, but the biggest source of intrigue may be the new chair’s debut press conference. Which Warsh will show up: the recent advocate of lower rates, or the inflation hawk we saw during and after the Global Financial Crisis?”

—Anna Wong, Andrew Sacher, Eliza Winger, Stuart Paul, Chris G. Collins, Alex Tanzi and Troy Durie. For full analysis, click here

In Canada, retail sales data for April and a flash estimate for May are expected to show continued headline growth, largely driven by higher gasoline prices. The key question is whether spending in other categories also increased. Consumers in March mostly pulled back as rising energy costs absorbed a larger share of budgets.

Meanwhile, existing home sales for May are likely to remain subdued. Regional data indicate that while activity picked up in Toronto, it declined in Vancouver, Calgary and Montreal. Housing starts also likely slowed. In contrast, manufacturing and wholesale sales are expected to have continued rising in April, supported by elevated oil prices.

For more, read Bloomberg Economics’ full Week Ahead for the US Asia

Investors face a packed week of monetary decisions and key activity data, with attention centered on whether signs of slowing growth are becoming more evident even as inflation risks remain uneven.

The week begins with New Zealand’s services-sector performance index and electronic card spending figures for May. The same day, Pakistan’s central bank is expected to raise its key rate to 12% from 11.5%, while India publishes an employment report.

The focus shifts to China on Tuesday, when a batch of May activity indicators will provide the latest assessment of the world’s second-largest economy.

Retail sales are expected to be flat from a year earlier, while industrial production is seen accelerating modestly. Investors will also scrutinize fixed-asset, property investment and residential sales data for signs of whether the prolonged downturn in the housing sector is stabilizing.

Later on Tuesday, the Reserve Bank of Australia is widely expected to leave its cash rate target unchanged at 4.35%, the first pause of 2026 after three increases.

The Bank of Japan follows hours later and is expected to raise its policy rate to 1%, extending a gradual normalization cycle. The decision will be watched closely for clues on how policymakers view the durability of wage growth and inflation as Japan moves further away from the ultra-loose policies that defined the previous decade.

Trade will dominate the agenda on Wednesday. Japan is expected to report another solid month of external demand. The country also releases core machinery orders, a closely watched gauge of business investment.

Elsewhere, Singapore’s non-oil domestic exports are projected to have maintained strong momentum. Taiwan’s central bank is expected to leave its benchmark rate unchanged, while New Zealand publishes current-account figures.

Thursday brings first-quarter gross domestic product data from New Zealand, where economists expect growth to accelerate to 0.9% quarter-on-quarter from 0.2% in the previous three months.

Central banks in Southeast Asia also take the spotlight. The Bangko Sentral ng Pilipinas is expected to raise its overnight borrowing rate while Bank Indonesia is seen staying on hold after a surprise hike on June 9.

In Japan, headline CPI is forecast to rise 1.5% year-on-year in May. Malaysia’s trade figures and New Zealand’s trade balance round out the regional calendar.

For more, read Bloomberg Economics’ full Week Ahead for Asia Europe, Middle East, Africa

The UK faces a combination of key political and economic events, including a by-election on Thursday that could propel Manchester Mayor Andy Burnham into Parliament and set him up to challenge Prime Minister Keir Starmer.

The Bank of England decision is the same day, with a majority of officials seen likely to block a rate hike. Numbers out on Wednesday are expected to show a pickup in inflation, while labor-market data arrive on the morning of the policy outcome.

Switzerland will also be in the news. Voters there decide on Sunday whether the country’s population should be capped at 10 million, a choice that could have huge long-term ramifications for the economy. While not relevant to current monetary policy, the outcome could overshadow the SNB’s quarterly decision on Thursday.

In Norway the same day, officials are likely to hold off from another rate hike, though many analysts expect a close decision after a dramatic pivot in May.

Most see price pressures remaining close enough to the Norges Bank’s projections to allow policymakers to wait until September, when a further 25-basis-point increase might turn out to be the last of the year. Business sentiment data from the central bank’s contacts showed activity was less resilient than expected in March, also reducing the urgency to hike.

The prior day in Sweden, the Riksbank is highly likely to keep borrowing costs steady. Investors will look for clues on future moves, particularly given how weakness in the economy is giving policymakers scope to wait.

Updated forecasts and a rate projection will draw the focus of economists, who say a signal may come that borrowing costs could rise from the turn of the year.

Here’s a snapshot of other central bank decisions on the calendar:

Namibia may lift its rate by 25 basis points to 6.75% on Wednesday to contain inflationary pressures linked to the Iran war, following a similar move by South Africa last month. The Namibian dollar is pegged to the rand. With inflation picking up at a faster rate than the central bank expected, Botswana could raise its benchmark again on Thursday, from 5.5% currently. The Czech meeting could well deliver a hike, not least given Governor Ales Michl’s declaration that a move is “a real possibility.” That would reverse course after a year of no change following a cut last May. Ukrainian officials set rates on Thursday too. On Friday, Bank of Russia policymakers will weigh whether to make a ninth straight cut to their key rate, with price growth easing even as concerns remain about the inflationary impact of the war in the Middle East. In the euro zone, industrial production and trade data on Monday will offer a snapshot of manufacturing at the start of the second quarter. Germany’s ZEW investor sentiment comes the following day, followed by the ECB’s wage tracker on Wednesday.

Further afield, consumer-price numbers will draw attention. Data due Monday may show Israel’s inflation rate rose to 2.1% in May, reflecting price pressures from the Middle East conflict.

South Africa’s gauge is expected to have climbed to 4.7% in May. The data will be closely watched after the Reserve Bank’s quarter-point rate hike last month. Its scenarios suggest a prolonged war that leads to higher food and oil prices, plus rand weakness, could require additional tightening.

For more, read Bloomberg Economics’ full Week Ahead for EMEA Latin America

In Brazil, inflation has vaulted over the top of the central bank’s target range and the economy just won’t quit, but the central bank probably has just enough room for maneuver for a third straight quarter-point rate cut, to 14.25%.

Brazilian GDP-proxy data for April may show little let-up from the first-quarter’s robust outcome, with the economy still riding a wave of pre-election government fiscal expansion, credit initiatives and tax breaks.

For Chile’s central bank, a quarter-point rate hike on Tuesday appeared to be a strong likelihood until May inflation staged a surprise slowdown. The current consensus is solidly behind a fourth straight hold at 4.5%.

From Peru, April’s GDP-proxy report will likely show that the economy expanded for a 25th straight month, the longest run since before the global pandemic. May’s unemployment rate in the capital, Lima, may move up slightly from April’s 5.3% print despite a run of strong job growth.

Colombia over the course of three days serves up a quartet of April indicators — GDP-proxy data, retail sales, manufacturing production and industrial production.

First-quarter output beat estimates and auger well for the rest of the first half, but much of the momentum is being driven by government stimulus policies that pressure inflation and fiscal imbalances.

For more, read Bloomberg Economics’ full Week Ahead for Latin America –With assistance from Swati Pandey, Laura Dhillon Kane, Reade Pickert, Monique Vanek, Piotr Skolimowski, Mark Evans, Ott Ummelas, Beril Akman, Tony Halpin, Charlie Duxbury and Jonnelle Marte.

©2026 Bloomberg L.P.