MNI Global Week Ahead June 7 – 11

Key Things to Watch For:

• Wednesday, June 9 – Bank of Canada Rate Decision
  • Overnight rate and QE are both seen remaining unchanged at 0.25% at CAD3 billion a week, with language affirming further tapering of asset purchases remains possible as the economic recovery builds.
  • The statement needs to balance the GDP slowdown in Q1 and April with inflation moving above the 2% target on base effects and is unlikely to adjust guidance of rate hike in 2H 2022.
• Key is how far officials go in affirming the market view that growth in the second half of this year will be strong on vaccine rollout and easing of health lockdowns.

• Thursday, June 10 – ECB Rate Decision
  • The European Central Bank meets Thursday and the pace of bond buying under the current PEPP, the latest projections for the economic outlook and any progress towards the soon to be revealed strategy review will be the main points of interest for financial markets, with all the main policy settings expected to be left unchanged.
  • The benchmark deposit rate is set to stay ast -0.5%, with QE levels seen unchanged from current levels, although there could be some tweaking of language in the policy statement.
  • The staff projections will likely see growth called higher in 2021 and 2022, and inflation higher in 2021, although little changed from the March projections in both 2022 and 2023.

• Thursday, June 10 – U.S. May CPI
  • U.S. CPI should grow 0.4% following a 0.8% gain in April, according to Bloomberg. From a year earlier, CPI is forecast to increase 4.7%, the fastest since 2008.
  • Prices for things like airfare and hotel stays, hit hard by pandemic shutdowns, are expected to have increased during the re-opening.
  • Goods prices should also increase, driven by supply chain disruptions and materials and worker shortages.
  • Excluding food and energy, core CPI should increase 0.4%, according to Bloomberg.