On tap: April consumer price, industrial production, and housing construction data, plus May regional factory activity and consumer sentimentThe Federal Reserve remains focused on inflation. In the statement after the May 9 monetary policy meeting, the central bank reinforced its view that inflation is the "predominant policy concern." Even though prices outside of food and energy are expected to grow at a slower pace, they are currently "elevated" in the Fed's view. What's more, economic growth is expected to pick up through the year.
The Fed's underlying expectations of easing inflation and improving growth will face another test this week. The financial markets will be most interested in the April consumer price index data. Energy prices are once again expected to make the headline reading look high.
But it's the core inflation figures that are more important. Excluding food and energy, prices rose 2.5% from a year ago in March, from 2.7% in February. A similar easing would likely make the stock market happy, as it would seemingly reduce the need to raise rates. It would also likely lead those economists who are forecasting interest rate cuts later this year to reaffirm that expectation.
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