Markets are in for a big week since the ECB, the BoJ, and the Fed will all convene policy meetings. The Fed is expected to pause while others continue.

Fed Decision 

Investors will be paying close attention to the "dot plot," which reflects officials' forecasts for future tightening, when the Fed concludes its two-day policy meeting on Wednesday. The Fed is anticipated to put interest rates on hold.

While the Fed has said that a halt shouldn't be seen as a sign that interest rates have reached their limit, the markets are still pricing in another 25 basis point increase in July before a corresponding reduction in rates by December.

Latest economic data indicates conflicting trends in the American economy: while pay growth slowed in May, the economy generated 339,000 more jobs than anticipated, inflation is reducing but is still much higher than the central bank's objective of 2%.

Inflation Data 

The most recent U.S. inflation data will be available when the Fed convenes its meeting on Tuesday.

Following an increase of 0.4% in April, headline consumer prices are predicted to grow by 0.3% on a monthly basis. It is anticipated that core inflation, which excludes volatile prices for food and fuel, would increase by 0.4% on a monthly basis.

The inflation data will be thoroughly analysed by market investors for indications that the Fed's rate rises are continuing to hold down inflation without seriously harming GDP.

On Wednesday, producer price inflation data for May will be released, and on Thursday, retail sales data for May will be released along with the weekly report on new unemployment claims.

ECB

The European Central Bank is expected to differ from its American counterpart when it meets a day following the Fed's decision since markets are ready for another quarter-point rate rise and another of a similar magnitude is anticipated to occur in July.

After several movements of 75 and 50 basis points, the ECB lowered the tempo of its rate increases to 25 basis points at its meeting in May.

Last Monday, ECB President Christine Lagarde said it was too soon to declare a core inflation peak and reiterated that rates would need to be raised once more.

The inflation rate in the eurozone is at 6.1%, which is still higher than the ECB's objective of 2% but has decreased from a peak of 10.6% in October of last year.

Stocks 

U.S. equities have risen 20% from their October lows, defying concerns of a recession, a financial crisis, and skyrocketing Treasury rates.

In the past, a 20% increase from the lows of a bear market signalled future stock price gains.

Despite worries about the possibility of a recession and rising inflation, a megacap stocks surge, better-than-expected earnings season, and views that the Fed is reaching the conclusion of its rate-hiking cycle have supported stocks in the United States so far this year.

(Sources: investing.com, reuters.com)