Traders await the US March inflation report, the Federal Open Market Committee (FOMC) minutes release and the Bank of Canada (BoC) interest rate decision due to be published later today.

Commenting on US inflation and monetary policy, BlackRock’s analysts noted in a report: “U.S. inflation data this week will show core inflation remaining well above the Fed’s 2% target. We don’t see the Fed hiking enough to get it all the way to 2%. The Fed is sticking to hiking rates to get inflation down to target, even as financial cracks start to appear. We think the Fed will eventually stop hiking when the damage becomes more apparent.”
 

US CPI inflation March report

The US CPI inflation report due to be released today could influence the value of the US dollar against its competitors. Market analysts suggest that headline inflation will come in at 5.3% on a year-to-year basis, 0.7% lower than February’s reading.

A survey published by the Federal Reserve Bank of New York showed that the median expectation regarding headline inflation is to be up by 4.7% one year from now, slightly higher than February’s forecast. Economists note that the Fed takes into consideration the specific survey to evaluate and amend its monetary policy.  
 

Bank of Canada (BoC) Interest Rate Decision

The  BoC will announce its decision on interest rates later today. Economists suggest that the BoC’s governing board will keep borrowing costs on hold. The board is expected to share its projections regarding economic growth and consumer inflation in its quarterly monetary policy report.

Economists note that job figures and GDP growth have been stronger than expected in the past few months although interest rates have hit a multi-year record high. The BoC’s governor said that the central bank would pause its rate hiking plans but kept the door open for reevaluation depending on economic conditions.
 

UK GDP growth report

The Office for National Statistics (ONS) will publish data related to the UK’s GDP growth in February. Analysts forecast a 0.1% growth rate in February on a month-to-month basis.

According to the International Monetary Fund (IMF), the performance of the British economy in 2023 will be the worst among the 20 largest economies (G20), which includes Russia, which is now experiencing the effects of sanctions. It should be noted that the IMF revised its previous UK GDP forecast of a 0.6% contraction in 2023.

Commenting on the IMF’s forecast, Chancellor Jeremy Hunt said: “Our IMF growth forecasts have been upgraded by more than any other G7 country. The IMF now says we are on the right track for economic growth. By sticking to the plan, we will more than halve inflation this year, easing the pressure on everyone."
 

US retail sales decline in March?

On Friday, market analysts will scrutinize the US March Retail Sales report. Economists suggest that retail sales rose by 3.2%, on an annualized basis, a far cry from the 5.4% reading recorded in February.

A survey published by Mastercard ServicePulse showed that retail sales excluding cars rose by 4.7% on a year-to-year basis in March. Commenting on the survey results, economists at Mastercard said, “There are a number of factors influencing how today’s consumer is shopping including inflation, the labor market, food and gas prices, and the path of interest rates. But they’re still spending — we’re seeing varied growth sector by sector, with purchases largely shifting to necessities and experiences.”

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