The week ahead in markets and economics

In a pivotal week for global monetary policy, three of the world’s most influential central banks – the Federal Reserve, Bank of England, and Bank of Japan – are set to announce their latest interest rate decisions. Markets are watching closely for signals on the future path of rates amid diverging inflation trends and economic growth concerns.

These decisions come at a time when global central banks are navigating a delicate balance: cooling inflation without derailing fragile recoveries. While the Federal Reserve and Bank of England are inching toward easing, the Bank of Japan is still gauging whether to exit its long-standing stimulus stance. The outcomes this week could set the tone for markets heading into the second half of 2025.

US: Fed decides

Retail Sales (May) – Tuesday, 17 June

Consumer spending drives more than two-thirds of US GDP, so retail sales data is a critical release for an insight into the behaviour of the American consumer. Analysts expect modest growth, reflecting cautious optimism amid easing inflation. A stronger-than-expected outcome could delay Federal Reserve interest rate cuts.

Federal Reserve decision: Wednesday, 18 June

• Expected action: Hold rates steady at 4.25%–4.50%.
• Why it matters: The Fed’s decision comes amid easing inflation but persistent uncertainty over the impact of tariffs and slowing growth. The meeting will also include the Summary of Economic Projections, or dot plots, offering fresh insights into policymakers’ views on inflation, GDP, and the future rate path.
• Market impact: A hawkish tone could delay rate cut expectations, while dovish signals may boost equities and weaken the dollar.

UK: Inflation and the BoE

UK Consumer Price Index – Wednesday, 18 June

With the Bank of England under pressure to ease rates, this inflation print is pivotal. A continued decline could open the door to a summer rate cut, while sticky inflation may force policymakers to hold firm.

Bank of England decision: Thursday, 19 June

• Expected action: Hold rates at 4.25%.
• Why it matters: After a 25-basis-point cut in May, the Bank of England is expected to pause as it assesses the trajectory of inflation and wage growth. The decision comes just a day after the release of the UK’s May CPI data, which could sway sentiment.
• Market impact: A surprise cut or dovish commentary could pressure the pound and lift UK equities, while a more cautious stance may signal a slower easing cycle.

Europe: Manufacturing insight

The Eurozone Flash PMIs (Purchasing Managers’ Index) for June will be released on Friday, providing a timely read on business activity across manufacturing and services.

Japan: A central bank outlier

Bank of Japan decision: Tuesday, 17 June

• Expected action: Hold rates at 0.5%.
• Why It matters: The Bank of Japan remains an outlier among major central banks, maintaining ultra-loose policy. However, with inflation creeping higher and the yen under pressure, markets are alert to any shift in tone or forward guidance.
• Market impact: Any hint of tightening could jolt currency markets and global bond yields, given Japan’s role as a major capital exporter.

Corporate earnings

While the earnings season is winding down, several notable companies are set to report:

FedEx (Tuesday) – A bellwether for global trade and logistics.

Ashtead Group – Analysts are focused on how the equipment rental giant is navigating a mixed macroeconomic backdrop when it releases annual results, particularly in its core US market.

AO World (Wednesday) – The online electronic goods retailer will provide insight int0 the UK consumer in its annual results.