The moment Fed watchers have waited for is finally here—albeit with less drama than many believed a few weeks back. As we've long said, the two-day June Federal Open Market Committee meeting (Tue-Wed) should come and go with the federal funds rate still in the 4.25%-4.50% range that it's been in since December. Even as headline inflation measures appear to moderate, the robust labor market, evidenced by May's 4.2% unemployment rate, leaves Fed Chair Jerome Powell with little urgency to ease.
For one thing, President Donald Trump doesn't seem as ready to pivot away from his trade war as hoped. This week or next, Trump's Tariff Turmoil (TTT) could get a second wind as the White House previews "unilateral" import taxes. For another, the quick escalation in the conflict between Israel and Iran has oil prices surging. So, between TTT and the possibility that the Strait of Hormuz might be shut down, questions abound about GDP and inflation dynamics everywhere.
The Fed has lots of company this week. In Asia, for example, central banks in Japan, China, Indonesia, Taiwan, and the Philippines will announce rate calls. Like the Fed, both the Bank of Japan (Tue) and the People's Bank of China (Fri) are seen leaving rates unchanged.
Here's a look at the upcoming US data releases with the greatest chance of influencing FOMC members' views this week:
(1) Business activity. The New York Fed will get us started (Mon) with its June Empire State Manufacturing Survey. Following last month's gloomy -9.2 reading, the focus will be on whether Trump's tariff delays and China-trade-deal hopes have powered something of a rebound. The same can be said for the Philly Fed's business survey (Fri). The average of the two surveys might provide some insight into the direction of the national M-PMI (chart).
