Warsh and US Inflation Will Set Tone for July Fed Decision

(Bloomberg) — Kevin Warsh is about to make his first appearance before Congress as Federal Reserve chairman, and during two days of testimony he’ll have new US inflation data to parse with lawmakers.

Tuesday’s House Financial Services Committee hearing, which begins at 10 a.m. in Washington, will be preceded by June consumer price figures from the Bureau of Labor Statistics. Then on Wednesday, shortly after the BLS releases producer price data, Warsh will testify before a Senate committee.

Economists surveyed by Bloomberg expect both reports to show some relief following a surge in prices from March to May.

The recent decline in gasoline prices likely helped drag down the consumer price index, which may notch its first monthly decline since the onset of the pandemic in 2020. The producer price index, though, could show upstream inflation pressures continuing to build as the Iran war’s energy shock kept working its way through the economy. Economists see the 12-month change in the core gauge, which excludes food and energy, accelerating to 5.2% from 4.9%.

Several other Fed officials are also slated to speak in the coming week, in a sign that the quiet which descended over the central bank after Warsh took office may be starting to lift.

Highlights include a speech on Monday from Fed Governor Christopher Waller; remarks on Wednesday from New York Fed President John Williams and Fed Governor Lisa Cook; and speeches Thursday from Fed Vice Chair Philip Jefferson, Dallas Fed President Lorie Logan, and Kansas City Fed President Jeff Schmid.

Rounding out the US calendar are an update on retail sales on Thursday plus data Friday on industrial production, housing starts and consumer sentiment.

For more, read Bloomberg Economics’ full Week Ahead for the US What Bloomberg Economics Says:

“Markets currently imply 24% probability of a July hike — too low to think the Fed is realistically going to move then. For that to rise much would likely require both a hot CPI report and an overtly hawkish Fed chairman on Tuesday — both unlikely, in our opinion.”

—Andrew Sacher, chief US economist. For full analysis, click here

In Canada on Wednesday, officials are widely expected to keep their key rate at 2.25% for a sixth meeting. The Bank of Canada continues to balance downward pressure on inflation stemming from trade turmoil with the US against upward momentum from the Middle East conflict.

Higher gas prices have pushed headline inflation to 3.2%, even as core measures remain subdued.

June existing home sales and housing starts may show continued improvement, extending a gradual recovery after a prolonged period of weakness. Despite two consecutive quarterly contractions, recent data point to a second-quarter rebound.

Elsewhere, a possible rate hike in South Korea, growth data in China, and the UK’s annual Mansion House speeches are 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.

Asia

A highlight in Asia will be the Bank of Korea’s policy decision. Since taking the helm in April, Governor Shin Hyun Song has warned that inflation, solid economic growth, a weak won and surging home prices all point to tighter monetary policy, and economists expect him to put his words into action on Thursday by raising the base rate to 2.75%.

The main regional data release comes on Wednesday with China’s second-quarter gross domestic product. Growth is estimated to have slowed to 4.5% year-on-year, dragging the year-to-date rate to 4.8%.

The figures may underscore the divide between solid exports and sluggish domestic demand. On that note, China’s retail sales, due the same day, are expected to have slipped again in June after declining in May for the first time since 2022.

Also publishing GDP figures in the coming week are Singapore, where growth is seen slowing a tad, and Malaysia.

India updates on price trends with its release Monday of the June consumer-price index. The gauge is forecast to accelerate to 4.3%, in what would be the fastest advance since 2024. That’s still below the Reserve Bank’s 5.1% target for the fiscal year, but could prompt more hawkish comments when the central bank next sets policy on Aug. 5.

Australia releases a pair of sentiment gauges; the Westpac Consumer Confidence Index has recently slumped toward two-year lows, while the NAB business confidence reading may stay negative for a fifth straight month.

India releases its June jobless rate on Wednesday, and trade data are due during the week from China, Singapore and India.

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

The UK will take the limelight with the release of monthly GDP on Thursday that may show muted growth, along with some appearances by policymakers.

Chancellor of the Exchequer Rachel Reeves will deliver what’s likely to be her final annual speech to the Mansion House in the London on Tuesday, given that Andy Burnham shows no inclination to keep her on after his impending appointment as prime minister.

Bank of England Governor Andrew Bailey will speak at the same event, having testified to Parliament earlier in the day on his institution’s latest assessment of financial stability. And BOE chief economist Huw Pill is on the calendar for appearances on Monday and Wednesday.

In the euro zone, a blackout period in advance of European Central Bank’s next rate decision will start on Thursday. Before then, speakers will include Executive Board member Isabel Schnabel on Monday and Bank of Italy Governor Fabio Panetta on Wednesday.

Euro-area industrial production for May comes on Wednesday, followed on successive days by trade figures and a final take of inflation.

In Switzerland, the central bank on Wednesday will publish a summary of the discussion around its June quarterly decision. And in eastern Europe, Romanian inflation on Monday and possible discussions on a budget bill in Bulgaria will be among the highlights.

Israel releases consumer-price numbers on Wednesday; annual inflation is expected to ease to 1.6% in June from 1.9%, according to a Bloomberg survey. The Bank of Israel lowered rates this month and suggested they could cut further.

Finally, in a quiet week for monetary decisions around the region, Angola’s central bank will meet, with officials expected to cut borrowing costs on Tuesday.

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

Argentina’s June inflation report set for Tuesday is likely to show that consumer prices eased for a third month. Some local analysts see the first sub-2% print since August.

That would be welcome news for President Javier Milei, whose public standing has taken a pounding over his handling of graft allegations against his cabinet chief. South America’s No. 2 economy will also report June budget data.

Chile has no major releases on tap. Mexico offers only nominal wage and international reserves data, while Colombia will post May reports on retail sales, manufacturing and industrial production, and consumer confidence.

Brazil’s GDP-proxy data for May should see election-year fiscal stimulus — 80-year-old President Luiz Inacio Lula da Silva’s bid for another term in office is by no means assured — still holding up against historically restrictive monetary policy.

Brazil watchers can also look forward to the central bank’s weekly market readout of expectations and the May retail sales report.

In Peru, May GDP-proxy figures on Wednesday will likely show that the Andean economy expanded for a 26th straight month, though perhaps slightly off April’s 3.7% pace. June unemployment data for the capital Lima — May’s jobless rate of 5% matched a record low for the series — is also due.

In a notable development for the economy, Peru’s central bank chief Julio Velarde, 74, agreed to stay on for another term at the request of President-elect Keiko Fujimori. He’s served under 10 presidents and more than 20 finance ministers during almost 20 years at his post.

For more, read Bloomberg Economics’ full Week Ahead for Latin America –With assistance from Brian Fowler, Laura Dhillon Kane, Monique Vanek, Robert Jameson, Mark Evans, Piotr Skolimowski and Beril Akman.

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